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Draghi not expected to o keep the QE hope alive next week - TD Securities

FXStreet (Łódź) - Martin Schwerdtfeger, FX Strategist at TD Securities, suggests that despite general expectations Mario Draghi will not hint at preparations for QE at the monetary policy meeting on Thursday.

Key quotes

"Looking at the Eurozone bank lending data out today, household lending showed modest improvement mostly on the back of mortgages, not other consumer credit, especially in Germany. Meanwhile, lending to non-financial corporations remains stagnant."

"In a meeting where the ECB will be announcing modalities for its ABS program, we think Mr. Draghi will have to compromise, likely keeping the 'broad support within the ECB GC for additional unconventional measures' claim in his arsenal, but refraining from leading the market into thinking QE is actually in the making."

"Keep in mind that the ECB still has to announce the results of the AQR, and, most importantly, wait for the outcome of December's TLTRO."

"So, all in all, we believe those waiting for a nod from Mr. Draghi to QE based on the low take-up of the first TLTRO is in for disappointment."

"This would be another argument to stem the sharp decline in EURUSD we have witnessed recently."

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