Although the headlines from MNI pour some cold water on the Draghi confrontation rumours, you can bet that there will be questions raised in the press conference after the decision. It’s very doubtful that Draghi will admit to anything along those lines and will just refer to the fact that differences of opinion are welcomed and par for the course within the ECB and that many different views come into discussions. It will be a typical spin act and that alone might help EUR/USD lower as the market calms down and goes back to expecting QE.

So what else is expected from the ECB and Draghi? The general consensus is for no change to policy but there’s differing opinions to what may come out in the presser.

Credit Agricole

  • ECB – No change
  • Draghi – Dovish, may hint at adjustments or extensions to existing programs

Barclays

  • ECB – No change.
  • Says they are looking for Sov QE announcement in Q1 2015 and to fade any meeting/conference euro rallies

JP Morgan

  • ECB – No change
  • Draghi – Deliver additional measures to TLTRO including removing 10bp spread charge for borrowing, tinker with net lending multiples, extend TLTRO maturities

UBS

  • ECB – No change
  • Draghi – No new major guidance to be given

BNP

  • ECB – No change
  • Draghi – To stop short of introducing QE but will send a signal of commitment of expanding balance sheet

Goldman Sachs

  • ECB – No change
  • Draghi – Dovish Draghi to announce further actions with no clear indication of what measures may be

Morgan Stanley

  • ECB – No change
  • Draghi – To reiterate to do whatever it takes to avoid disinflation
  • They say that any euro rallies will be short lived

BOFA

  • ECB- No Change
  • Draghi – To insist that GC is unanimously prepared to take unconventional measures

UniCredit

  • ECB – No change
  • Draghi – No fireworks but Draghi may leave the door open to further easing

Danske

  • ECB – No change
  • Draghi – To be more dovish than Oct when signaling that sov QE is closer than thought

TD

  • ECB – No change
  • Draghi – Goes backwards on giving targeted size of balance sheet. Probability 75% ( EUR/USD likely goes through 1.2570, capped at 1.2610/25
  • Draghi downplays corp buying . Prob 15% (EUR/USD challenges 1.2625, break targets 1.2690/2700)
  • Draghi Sures up balance sheet expectations, confirms extensive discussions on conditions for TLTRO or covered bonds. Prob 10% (EUR/USD breaks down through 1.2440 to possibly 1.2400

So there we have it. In the current price environment we can probably expect any rallies to be well sold into unless we get an absolute bombshell.

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