Summary:

  • ECB minutes are broadly in line with the latest bank’s rhetoric
  • A debate over the pace and duration of the QE in the spotlight
  • EURUSD remains little changed, further upside contained

The account from the latest ECB’s meeting in September revealed similar remarks we’d already known. The bank opened a discussion over the pace and the duration of the asset purchase program as it had been suggested during the press conference last month. Key references are as follows:

  • ECB agreed to monitor exchange rate moves
  • Reassessment of stance must be gradual and cautious
  • Officials concerned about volatility and speed of euro rise
  • ECB agreed that substantial stimulus still needed
  • It must be mindful of market expectations of future policy
  • ECB discussed trade-offs in various QE re-calibration scenarios

The minutes underline that the ECB began talking about QE tapering and trade-offs under miscellaneous scenarios of the QE re-calibration. Moreover, officials expressed some concerns over the pace of the euro appreciation and its volatility, both of references had been illustrated during the last month’s press conference. One of the key remark may concern a dispute pertaining to the euro and the ECB’s assumptions to its macroeconomic projections as some policymakers called into question levels of the currency taken into calculations. They argued that the ECB could have underestimated strength of the single currency going forward.

On top of that, talks regarding the choice between the pace and the intended duration of the APP might suggest that one of the the most plausible scenario which the Governing Council could consider at its meeting on 26 October is an extension of the QE with a lowering of the amount of bonds it buys each month. The euro has been unimpressed with the account as the pair remains closed within a consolidation.

link do file download linkThe EURUSD remains closed between two pivotal technical levels. Having assumed a continuation of a rebound of the US dollar, the pair could break 1.17 which would open space for further depreciation up to 1.1450. Source: xStation