Citi discusses its expectations for this week's ECB policy meeting on Thursday.
"We expect the 22 July Governing Council meeting to be dovish to reflect the emphasis of the new Strategy to be more persistently accommodative in a low-inflation world. The main change should be in forward guidance to reflect the symmetric inflation target of 2% and more persistent policy that suggests a later tapering of asset purchases than previously expected (say in Q1 as opposed to Q4). Dovish risks include signaling later tapering at this meeting, while hawkish risks include opening the door to tapering at the September meeting," Citi notes.
"With dovish expectations, we think the immediate market implications may be limited. But the Meeting reinforces the ECB’s position as one of the most dovish central banks, which points to EUR weakness against high-beta currencies should global risk sentiment return, and a dovish ECB also should help broader sentiment at the margin," Citi adds.