ECB likely a placeholder meeting without a sustained EUR impact - BofA

Author: Adam Button | Category: Central Banks

Bank of America on the ECB meeting Thursday

Bank of America on the ECB meeting Thursday

Bank of America Global Research discusses its expectations for tomorrow's ECB July policy meeting. 

The ECB meeting this week should be a placeholder, but communication challenges point to risks, in our view. Eurozone data have been improving during the reopening, but due to base effects and consistent with (or in some cases lower than) expectations. COVID infection rates have stabilized to very low levels, but recent pockets of new infections suggest to us that full reopening is not yet an option," BofA notes. 

"Ahead of the important EU summit on the Recovery Fund, we do not see the ECB meeting as having much of a sustained EUR impact. The communication challenges we have discussed above could affect the EUR during the press conference, but absent a mishap, the main event for the week is the EU Summit. At some point later in the year, we would expect the ECB to try to address the sustained damage the economy has suffered from the COVID crisis, affecting the EUR as a result, but we may not be there yet.

The risk from the meeting is if the ECB comes across too positive, which although in the short term could support the EUR, it would lead to negative economic outcomes in the longer term and eventually contribute to EUR weakness," BofA adds.

For bank trade ideas, check out eFX Plus


For bank trade ideas, check out eFX Plus
By continuing to browse our site you agree to our use of cookies, revised Privacy Notice and Terms of Service. More information about cookiesClose