Credit Agricole CIB Research discusses its expectations for next week's ECB policy meeting.
"The markets seem to have defied the ECB's assurances that its policy will remain very accommodative despite the latest improvement of the Eurozone data and because of the officials’ desire to maintain favourable financial conditions...We think that FX investors wishing to 'call the ECB's bluff' and buying the EUR ahead of the 10 June policy meeting could be in for a dovish surprise," CACIB notes.
"Indeed, Credit Agricole CIB’s ECB strategist expects the Governing Council to delay any PEPP taper and signal its vigilance with respect to the resurgent EUR. This much could weigh on EGB yields and rates and thus boost the appeal of the EUR as a funding currency across the board. We therefore continue to advise caution on EUR in the near term," CACIB adds.