ECB QE could theoretically surpass €2 trillion according to reported program details - page 12
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ECB's Draghi says they will re-examine monetary policy accommodation at December meeting ECB president speaking in Brussels
That last comment sees euro sent lower taking out the 1.0730-35 bids support easily
EURUSD 1.0715 and EURGBP 0.7056 lending some support to cable
DAX turning higher too adding to euro pressure
Euroland's Economy Crawls Up Slower Than Hoped in Q3 The euro area's economy expanded at a slower pace than expected during the third quarter of the year, data showed on Friday.
The bloc's joint gross domestic product (GDP) rose 0.3% quarter-on-quarter during the three months ended September 31, following the 0.4% seen in the previous quarter, Eurostat showed in a preliminary reading.
Economic desks had bet on an unchanged pace of expansion.
Annual growth
Annually, the 19 countries paying with the euro added 1.6% of GDP during the reported period, more than the 1.5% hike seen in the second quarter.
Analysts had expected an acceleration to 1.7% expansion.
Country data
Earlier in the day, a string of national data was released, showing that Europe’s largest economy grew by 0.3% in the last quarter, slower than the 0.4% expansion seen in the three months to July, but meeting estimates.
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Main Rate to Stay Low: ECB's Constancio European Central Bank (ECB) Vice President Vitor Constancio spoke on Monday about new downside risks to the recovery in the euro area. Constancio said that the main rate needs to stay low for a prolonged period of time, claiming that the euro zone lacks a common fiscal policy.
In his keynote speech at the opening conference of 18th Euro Finance Week in Frankfurt, the ECB vice president commented that "the ECB monetary policy will continue to support the economy".
However, Constancio added that "low inflation rates reflect a sluggish recovery", and that there are no signs of general overvaluations in the euro area, adding that the "Inflation rate is more likely to be reached by 2017."
Concluding, Constancio said: "The ECB sees no asset bubble emerging, and sees downside risks to economic projects."
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ECB Members To Keep Pointing To December Easing; Sell EUR Rallies - Credit Agricole When it comes to the EUR, we expect rallies to stay a sell.
ECB members are likely to continue indicating that additional policy action should be expected in December, especially as inflation expectations remain relatively muted despite the last few weeks’ rebound.
Indeed, central bank chief economist Praet reaffirmed that risks to inflation expectations require a stimulus review and that there is the risk of de-anchoring inflation expectations. Incoming data is unlikely to change central bankers’ view.
Eurozone Current Account Surplus At 8-Month High The euro area current account surplus increased to an 8-month high in September, data from the European Central Bank revealed Thursday.
The current account surplus rose to EUR 29.4 billion from EUR 18.7 billion in August. It was the highest since January, when the surplus totaled EUR 30.6 billion.
The surplus on goods account increased to EUR 29.8 billion from EUR 22.1 billion. At the same time, the surplus on services remained unchanged at EUR 4.5 billion.
At the same time, primary income advanced to EUR 4.8 billion from EUR 3.8 billion and the deficit on secondary income narrowed to EUR 9.8 billion from EUR 11.6 billion in prior month.
The 12-month cumulated current account surplus for the period ending September was EUR 303.5 billion, equivalent to 3 percent of euro area GDP.
On an unadjusted basis, the current account surplus surged to EUR 33.1 billion from EUR 14.6 billion in August.
In the financial account, combined direct and portfolio investment recorded increases of EUR 23 billion in assets and of EUR 33 billion in liabilities.
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Draghi: ECB Will Do What it Can to Facilitate Growth European Central Bank (ECB) President Mario Draghi spoke at the Euro Finance Week in Frankfurt, with investors eyeing any potential measures to combat deflationary threats and aid the sluggish recovery.
Draghi couldn't say with confidence that the euro area recovery is complete though he believes the ECB's montary policy measures "have clearly worked."
He also stated that "the asset purchase programme was a powerful and flexible instrument," though if the current trajectory of the policy is not sufficient, the bank "will do what it can" to raise inflation.
Conceeding that growth momentum remains weak and inflation is well below the 2% objective, Draghi commented the extent of QE could be "adjusted in terms of size, composition or duration to achieve a more expansionary stance."
Core measures of inflation - which strip out volatile components - have also been drifting downward since mid 2012 and this will not be ignored when the ECB makes their assessment on the risks to stability.
A raft of speeches will see Draghi followed by Benoît Cœuré, a member of the ECB’s executive board. Peter Praet will also speak in Frankfurt, followed by Vítor Constâncio, the bank’s vice president. Bundesbank President Jens Weidmann is also speaking this morning.
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December 3rd just got even bigger The ECB meeting is on the 3rd Dec and now Yellen is due up too Bloomers just noting that Janet Yellen will be giving testimony to an economic committee that day too
It will probably one of the last appearances before Fed members enter the no-talk period before the FOMC
That's just upped the ante on what was going to be a fun day already. Could be a day to make sure you've got clean pants on
ECB Preview: Short euro and long bunds opportunities Key Points
Background
The European Central Bank is missing its single inflation target of “2% or a bit below” on headline inflation in the past two years. The Frankfurt based institution has already taken the historic step of setting a negative deposit rate in June 2014 and further lowering it to -0.20% in September 2014.
Stubbornly low inflation, due to falling oil prices and to a slow weakening of the exchange rate have led the ECB to forge ahead with a Quantitative Easing (QE) program of its own, playing catch-up with its peers in the US, the UK and Japan. The plan, announced in January 2015 and implemented since March runs at a scale of €60 billion per month and is officially intended to end in September 2016, reaching a total scale of €1.14 trillion.
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Euro on shaky ground as ECB easing talk mounts, stocks up The euro slipped back towards seven-month lows, bond yields fell and European shares gained on Thursday as talk of aggressive stimulus from the European Central Bank next week grows.
European shares (FTEU3) rose 0.25 percent in early trade, while MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) rose 0.5 percent. Japan's benchmark stock index (N225) also closed 0.5 percent higher.
The euro remained under pressure a day after euro zone central bank officials told Reuters that they are considering options such as staggered charges on banks hoarding cash and buying more debt ahead of next week's ECB meeting.
That fueled talk that the central bank is getting ready for aggressive measures to lift inflation and economic growth in the 19-member euro zone.
"Ultimately, I think the ECB will be aggressive and that divergence in policy with the United States must imply a weaker euro," said Chris Scicluna, head of economic research at Daiwa Capital Markets in London.
"The question now is how far can we go, and as the Fed tightens, euro/dollar parity is looking likely by the second quarter of next year."
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EUR: The Quiet Before The Storm; How To Play It? - Credit Agricole The EUR came under sharp selling pressure on the back of media reports about the ECB considering a two-tier deposit rate cut. In essence, the ECB will want to distinguish between retail and wholesale banks in the Eurozone. The policy makers are reluctant to penalize the retail banks that fund themselves mainly via domestic deposits too aggressively given that this could increase the risk of deposit flight. As a result, they could end up penalizing wholesale banks more aggressively given that the threat of deposit flight is less pronounced there.
All that could imply that deeper depo rate cuts could be announced for certain banks in the Eurozone next week. One way to do that is to use thresholds levels for excess deposits beyond which the ECB will apply more onerous penalty. These thresholds will be a function of the bank’s required reserves, which in turn depend on the size of their retail deposit funding.
If the ECB were to adopt the above measures this need not be seen as a significant drag on the EUR especially if it penalizes less the banks with the larger retail deposit bases. Indeed, the flight from EUR was partly driven by foreign depositors fleeing because of concerns that the retail banks will start charging negative deposit rates. If these banks are ‘spared’ by the ECB, however, this could slow down the EUR-outflow not accelerate it. We further expect that more aggressive deposit rate cuts could encourage bank lending as well as investor demand for Eurozone stocks. These could prove long-term growth and EUR positive.
In terms of views and as stressed above we see additional room of the EUR correcting higher. This is especially true as there is limited room of even further rising ECB easing expectations. We expect levels closer to 1.08 to prove another opportunity to sell the currency.