6 Nov 2013
Flash: ECB event risk sharply higher than average this month on disinflation fears - BMO Capital Markets
FXstreet.com (Barcelona) - Stephen Gallo, European Head of Currency Strategy at BMO Capital Markets feels that if the ECB chooses to leave interest rates on hold tomorrow, it’s quite likely that the rally in EUR/USD will be significantly less than the sell-off would have been in the instance of a 25bps cut.
Key Quotes
“A result of unchanged is worth about 0.20-0.30 point (20-30 pips) of immediate upside in EUR/USD at most, although more EUR short covering could follow depending on what comes out of the press conference afterwards. Heading into the decision, the market appears positioned on the short side of the EUR.”
“In the strategy team, we think a 25bps cut in the main refinancing rate is worth about 0.80 point to 1.5 points of immediate downside movement in EUR/USD, whilst a cut of 50bps is probably worth around 1.0-1.75 points of immediate downside.”
Key Quotes
“A result of unchanged is worth about 0.20-0.30 point (20-30 pips) of immediate upside in EUR/USD at most, although more EUR short covering could follow depending on what comes out of the press conference afterwards. Heading into the decision, the market appears positioned on the short side of the EUR.”
“In the strategy team, we think a 25bps cut in the main refinancing rate is worth about 0.80 point to 1.5 points of immediate downside movement in EUR/USD, whilst a cut of 50bps is probably worth around 1.0-1.75 points of immediate downside.”