Disappointment from the ECB ahead would be euro supportive

The headline is the in a nutshell view from Macquarie following the European Central Bank overnight.

• The banks notes expectations building for more from the ECB
• But the ECB have a limited range of policy options available
• The bank also faces political headwinds to further aggressive action

And thus eventual action could be disappointing to markets.

For the euro ahead:

• market is pricing around 18bps of policy rate cuts over the next 12 months
• Eurozone bond market rally is an indication market is also expecting the ECB to restart QE

And thus is if the ECB fail to deliver on either of these, euro rates would go higher supporting the euro

Secret message?

;-)