A European Central Bank preview and scenario analysis from ING - this is awesome!


  • survey indicators still point to a continuation of the recovery well into 2018
  • As inflation (expectations) remain low and clearly below the ECB's preferred 2% level, strong growth will be essential for the ECB to publicly announce details of its tapering of QE for 2018

What this means for markets

FX market: One-off move in EUR/USD higher followed by range trading

  • We look for a knee jerk reaction in EUR/USD higher, potentially testing the 1.20 level in response to the expected cut in QE from €60bn to €25bn per month.
  • Yet the lower for longer QE anchoring the scale of Bund sell-off and Italian elections in early 2018, suggest only 'one-off' EUR/USD upside.
  • We look for the cross to range-trade in coming months and only spike higher in 2Q18 once Italian election risk passes


Earlier previews: