13 Jan 2015
Barclays: Euro area deflation supports QE – eFXnews
FXStreet (Barcelona) - The eFXnews Team notes Barclays’ expects ECB to commence its QE to combat declining inflation and inflation expectations.
Key Quotes
“Euro area inflation entered negative territory in December, owing mainly to a further sharp decline in oil prices, in combination with another round of disappointing euro area data, notes Barclays Capital.”
“This week, however, market attention will undoubtedly be drawn to the ECJ’s Advocate General, who is expected to issue his preliminary opinion on OMT legality with regards to the unlimited nature of its size and the pari passu status of the ECB on its sovereign bond purchases under OMT (Wednesday).”
"We do not think that these legal proceedings will unduly delay EGB QE, though a ruling in favor of the ECB being senior in its sovereign purchases could undermine the effectiveness of QE and pose some short-term risks to our EUR bearish view.”
“We think the ECB might avoid certain language (such as “unlimited” interventions) and may wait until the political situation in Greece cools down, before purchasing any GGBs. Nonetheless, the ECB is expected to engage in outright purchases to combat declining inflation and inflation expectations, in our view"
"We continue to see significant EUR depreciation from here, particularly against the USD.”
This content has been provided under specific arrangement with eFXnews.
Key Quotes
“Euro area inflation entered negative territory in December, owing mainly to a further sharp decline in oil prices, in combination with another round of disappointing euro area data, notes Barclays Capital.”
“This week, however, market attention will undoubtedly be drawn to the ECJ’s Advocate General, who is expected to issue his preliminary opinion on OMT legality with regards to the unlimited nature of its size and the pari passu status of the ECB on its sovereign bond purchases under OMT (Wednesday).”
"We do not think that these legal proceedings will unduly delay EGB QE, though a ruling in favor of the ECB being senior in its sovereign purchases could undermine the effectiveness of QE and pose some short-term risks to our EUR bearish view.”
“We think the ECB might avoid certain language (such as “unlimited” interventions) and may wait until the political situation in Greece cools down, before purchasing any GGBs. Nonetheless, the ECB is expected to engage in outright purchases to combat declining inflation and inflation expectations, in our view"
"We continue to see significant EUR depreciation from here, particularly against the USD.”
This content has been provided under specific arrangement with eFXnews.