QE-speculation not a burden for EUR yet

So far the members of the ECB council have refrained from clear references on QE extension. Instead they use the usual words, as was recently the case with executive board member Yves Mersch, the ECB would not hesitate should the inflation outlook weaken. 

At the same time he points out, as some of his colleagues had also done recently, that weaker growth in the Emerging Markets, falling commodity prices as well as the stronger euro had recently increased the downside risks for the economic and inflation outlook. 

However, he also points out that it was still too early to be able to tell to what extent these factors would actually affect the development of inflation in the euro zone. So for the time being we will have to be patient. 

"The question is, how long will the ECB wait. The weakness of the Emerging Markets is likely to have arrived in Germany by now. The ZEW economic outlook has been pointing in that direction for some time and the October data due today is likely to continue this negative trend", says Commerzbank. 

The PMI for Germany as well as the euro zone will slowly begin to show the first signs of weakness. However, the currently robust EUR suggest that the market is not yet expecting a further easing of monetary policy. 

However, that could change very quickly as soon as not just the sentiment indicators but also the hard data reflects weaker growth in the euro zone. That means the potential for EUR reversals is high.