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Further ECB easing not likely - BTMU

FXStreet (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, does not see the European Central Bank announcing easing measures this week.

Key Quotes

"This week the ECB, the BOE and the BOJ all meet on Thursday and after Jackson Hole it will be all eyes on the ECB. The comment at Jackson Hole that the ECB will “acknowledge” the fact that financial market measures of inflation expectations had become unanchored means expectations are high."

"However, we see no new easing being announced on Thursday. While the Jackson Hole comment is significant, it is an observation over the month of August and more time will be needed to assess inflation expectations. It is also worth noting that both the 5-year and the 10-year inflation swap has rebounded modestly in recent days."

"The best prospect for a significant announcement on Thursday may be in relation to the ABS QE program. This would be presented as part of the ongoing easing plans announced in June and with BlackRock now hired to work on the implementation of an ABS QE program, the time may now be right for more concrete details to be announced."

"Any program would be in the hundreds of billions size and its greatest market impact will come from the view that this would be a mere pre-cursor to a larger sovereign debt QE program perhaps around the end of the year. So market participants on Thursday will be more focused on any hints in relation to that rather than the specifics of any ABS QE program itself."

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