Danske Research discusses its expectations for next week's ECB meeting.
"At next week’s ECB policy meeting, we do not expect any new measures to be announced. However, with the COVID-19 spreading increasing, we expect the ECB to send its usual dovish signals, which could raise further market expectations for a December decision to increase/extend PEPP due to its open interpretation of the language. Our baseline is for the ECB to signal a readiness to act subject to incoming data in the coming 6 weeks and not a pre-commitment to expand already next week," Danske notes.
"We do not expect markets to react strongly to the press conference. We expect European fixed income will continue to trade in its tight range (Bunds range between -65bp and -40bp), while ECB is not a game changer for the EURUSD.
We expect Lagarde to be questioned on the economic and inflation uncertainty and upcoming December staff projections, the content of the toolbox, effectiveness of the tools the divergence of views in the governing council," Danske adds.