Preview of the European Central Bank meeting this week via CBA:
- We expect EUR/USD to edge higher this week.
- The ECB is widely expected to keep interest rates on hold Thursday. However, we anticipate the ECB will signal a gradual shift towards a less accommodative monetary policy stance which is EUR supportive.
- Specifically, the ECB will likely confirm the termination of its €30bn/month asset purchases for end-September and provide a guide on how long they will reinvest maturing assets. Improving Eurozone inflation dynamics also suggests the ECB will raise its headline CPI inflation projections (currently 1.4% for 2018 and 2019 and 1.7% for 2020).
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