ECB May Keep Its Policy Unchanged Next Week

  • The pandemic will still be the dominant factor in policy and regional growth, but the first batch of guaranteed bonds issued by the EU has achieved great success.
  • Danske Bank expects that the European Central Bank will not introduce any new measures next week.
  • The U.S. double deficit is worsening and the trade balance is at its worst in 15 years.

According to news sources, the euro against the dollar is likely to remain firm in the 1.15-1.20 range as risk sentiment improved, and the European Central Bank is likely to remain with unchanged policies. The new coronavirus cases and increased restrictions will limit the euro’s gains.

The European Central Bank (ECB) is the central bank of the Eurozone, a monetary union of 19 EU member states which employ the euro. Established by the Treaty of Amsterdam, the ECB is one of the world’s most important central banks and serves as one of seven institutions of the European Union, being enshrined in the Treaty on European Union (TEU).

One member of the European Central Bank has always stated that their policy stance is unlikely to change in the European Central Bank’s interest rate decision next week.

The pandemic will still be the dominant factor in policy and regional growth, but the first batch of guaranteed bonds issued by the EU has achieved great success.

The largest Euro sustainable bond issuance has provided support for the Euro. The €17 billion (divided into 10-year and 20-year periods) of this issuance has been oversubscribed by 14 times (over 233 billion Euros).

The Euro may benefit from global risk appetite,  the post-Brexit trade negotiations have also made progress.

Danske Bank expects that the European Central Bank will not introduce any new measures next week, but it will release the dovish signals that have been put forward in the past.

This may increase the market’s expectations that the European Central Bank will issue an official resolution in December to increase or postpone the PEPP plan. The one-month target for the euro against the dollar is 1.17, and the three-month target is 1.20.

Mitsubishi UFJ, said the euro continue to show resilient investment by the EU in the new coronavirus epidemic in decision more confident of the performance, which includes the European recovery fund implementation.

Further positive signals from the European Commission announced the issuance of €17 billion, of which €10 billion will expire in October 2030, €7 billion due in 2040, which is the EU’s highest ever borrowed loans amount.

The European Union welcomes the strong interest of investors, which has become the latest evidence that newly issued bonds help increase the attractiveness of the euro, which may be regarded as the most liquid alternative to the dollar.

Headquarters of Danske Bank, located in the Erichsens Palace building in Copenhagen, Denmark.

Eric Robertsen, head of global research at Standard Chartered Bank , said that the U.S. double deficit is worsening and the trade balance is at its worst in 15 years. The victory of former Vice President Biden will mean that the decline of the dollar will be very clear.

If Trump is re-elected, the situation will be more complicated in the short term. Anyway, he still believes that the dollar will show a very obvious downward trend in the next few years.

JP Morgan ‘s economists David Kelly said the US economy has seen a V-shaped recovery, but is actually a V-shaped interruption, when the fiscal stimulus waning, economic growth will slow again. He also predicted that the United States’ economic growth rate in the fourth quarter will be much slower than in the third quarter.

Goldman Sachs recently adjusted the economic growth rate of Turkey in 2020, from the previously predicted contraction of 5% to 3.5%. Many domestic economic indicators in Turkey have gradually stabilized.

The economic confidence index of the Turkish people is slowly recovering. Turkish finance Minister Alba Iraq recently stated that Turkey’s economy is expected to bottom out within the year and usher in a V-shaped recovery.

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Joyce Davis

My history goes back to 2002 and I  worked as a reporter, interviewer, news editor, copy editor, managing editor, newsletter founder, almanac profiler, and news radio broadcaster.

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