ECB QE is a hot topic currently in ForexLive towers. There’s lots to consider for next week, most notably what we’ll hear regarding more stimulus and how and what will be delivered.

European bond yields are tumbling again on QE excitement. France dropped below 1.0% while Spain, Portugal and Italy are all down between 7-9bps. Is the market getting too hyped up or are we really going to get full on QE?

In one cold corner of the globe we have Mr Adam Button, who says that we will not get any extra details on QE next week, and it will be the same party line we’ve heard recently. He does say that there’s a 10% chance of corporate bond buying being announced.

When asked to stop skirting around the houses and give me a definitive answer he said;

“I think Draghi gives a rousing speech and repeats what he said on Friday “IF THE OUTLOOK DETERIORATES and risks to inflation materialize, we will broaden the channels through which we intervene and the size, pace and composition of our purchases”

Mr Button thinks that the lack of concrete news on QE will see the euro rocket

In quaint old East London, I think that Mr Draghi will be dropping the bomb on details of QE (corp, sov or otherwise)

My main reasoning is that we’ve been told long enough that the ECB staff have been working on the measures and they’ve had long enough to come up with a plan. Will it be legal, who knows and more importantly who cares? Legalities didn’t stop Draghi from announcing the OMT and look at the effect that had, even if it’s never been used.

Sovereign QE is a different ball game but that’s not to say Draghi won’t use talk to great effect, like he has done time and time again.

So for me we get the details (not actual action) and the market then has 6 weeks to digest it all. That’s six weeks of potentially a 200-300 pip lower euro twinned with the economic boost of falling inflation from energy prices going into winter. That’s not something I feel Draghi wants to upset right now by dismissing the subject.

That’s our water fountain chatter so what about your ideas?

Draghi to drop the QE bomb or not?

Draghi to read from the usual script

Draghi lets loose the silver tongue

Draghi actually announces the start of new purchases