Euro trend weakening in place as ECB ramps up QE – ANZ

Brian Martin, Research Analyst at ANZ, notes that the ECB delivered a bazooka as it extended QE (by €540bn), allowed the purchase of bonds with a minimum one year maturity and the purchase of bonds with yields below the deposit rate (-40bps).

Key Quotes

“The euro fell and the forthcoming political cycle suggests portfolio outflows from the euro area will continue. Further EUR underperformance vs. USD, AUD, NZD and Asia is expected.”

“European interest rates are not going up. Based on the ECB’s guidance it could be 2020 at the earliest before “normalisation” starts.”