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ECB’s QE closer? – Danske Bank

FXStreet (Edinburgh) - The implementation by the ECB of some sort of QE-like programme continues to linger amongst market participants, commented Pernille Nielsen, Senior Analyst at Danske Bank.

Key Quotes

“European markets were again driven by expectations of the ECB going down the QE path”.

“Spanish 10Y government bond yields were down close to 2.0% during the day and German 10Y Bund yields dropped to an all-time low”.

“In our view, the likelihood of further ECB easing – including QE – has increased but we only expect a very dovish stance from Draghi next week”.

“The statement could include comments that there are signs that medium-term inflation expectations have started to be de-anchored”.

“Yesterday the ECB announced it had hired BlackRock as consultant to advise on a program to buy Asset-Backed Securities (ABS)”.

“One week ahead of the ECB meeting, this could be viewed as a hint that ABS purchases are currently the preferred policy tool. We believe more details about an ABS programme are likely in September”.

European stocks pull back, focus on data

European stocks followed Asian peers lower as the dollar weakened across the board ahead of the US gross domestic product figures. Uncertainty about European Central Bank possible easing measures has turned investors more cautious.
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