The next action is at the presser
EURUSD will the next decision in a few minutes when Draghi sits down so what might be the reasons for the change in QE?
There's has to be some lip service paid to the rise in inflation, and some better data overall but that will surely come with a heavy dose of reminding us about the downside risks. The double mention of "sustained" in the statement tells us what the ECB's real target is. It's not inflation touching 1.8% once then falling back, it's a period of inflation sitting steady at a level near their "Below or close to 2%".
Draghi has a fight on his hands now to not let the market get ahead of itself or this euro will blow higher. In that instance he might have to go hard on the dovish stance.
Reducing QE might have offset some other issues too, like bond scarcity. A reduction will take some of that pressure off. There's still many things he can announce that will leave the market thinking that this is far from a taper. If he doesn't then we'll be heading higher again.
As Draghi drops an early Christmas QE surprise, it's all rather exciting isn't it?
The man that keeps on giving
Don't forget to watch it all live here
