Menu

Search

  |   Commentary

Menu

  |   Commentary

Search

ECB likely to change its monetary policy tune in 2018, says CIBC Capital Markets

The European Central Bank (ECB) is expected to change its monetary policy tune going into 2018, according to a recent report from CIBC Capital Markets. Political turmoil is heating up in a number of Eurozone countries. German coalition negotiations have collapsed, Catalonia has voted for independence and there’s a national poll set for Italy during the first half of 2018. That said, positive economic fundamentals should still lead the currency stronger next year. Consumer confidence across the region is hovering around levels not seen since 2001.

Forward-looking manufacturing PMIs are at seven-year highs. Growth in the region has also accelerated. These improvements, along with others, underline our view that there will be little reason for the ECB to extend its bond-buying program past September 2018.

So, even though central bankers have suggested rates will remain at current levels well past the ending of the asset purchase program, we expect the Governing Council to at least sound more hawkish by early 2018. Assuming political risks don’t materialize, that should gradually move the needle on both longer-term rates and the currency.

Widespread negative yields have prevented many key investors, including foreign central banks, from buying new euro-denominated paper, and even a turn to modestly positive yields would generate some rebalancing in the euro’s favor. We target a 1.22 euro by mid-year 2018.

Meanwhile, FxWirePro has launched Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest

  • ET PRO
  • Market Data

Market-moving news and views, 24 hours a day >

January 19 15:30 UTC Released

USECRI Weekly Annualized

Actual

4.5 %

Forecast

Previous

3.3 %

January 19 15:30 UTC Released

USECRI Weekly Index

Actual

150.3 %

Forecast

Previous

147.6 %

January 21 21:00 UTC 273273m

KRPPI Growth YY

Actual

Forecast

Previous

3.1 %

January 21 21:00 UTC 273273m

KRPPI Growth

Actual

Forecast

Previous

-0.1 %

January 21 23:00 UTC 393393m

JPReuters Tankan DI

Actual

Forecast

Previous

27 k

January 22 07:00 UTC 873873m

NOIndus Confidence

Actual

Forecast

Previous

2 0

January 22 08:00 UTC 933933m

TWJobless Rate

Actual

Forecast

Previous

3.69 0

January 22 08:00 UTC 933933m

TWExport Orders YY

Actual

Forecast

Previous

11.6 0

January 22 09:00 UTC 993993m

GRCbank C/A YY

Actual

Forecast

Previous

-0.624 0

January 22 13:30 UTC 12631263m

USNational Activity Index

Actual

Forecast

Previous

0.15 %

Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.