TD Research discusses it expectations for this week's ECB policy meeting.
"We look for the ECB to confirm that the PEPP will end in March, and announce a temporary boost to the APP through 2022Q2 to around €50bn/mo, with a commitment to revisit the programme later. FX More flexibility probably won't translate into much EUR support," TD notes.
"While the EUR remains oversold and trades at a discount, we look to fade any near-term consolidation. Also keep in mind that the ECB is likely to follow on the heels of a hawkish Fed, suggesting EUR support, if it leads to that conclusion, might reflect an unwind of risk-correlated carry trades rather than a view on policy settings," TD adds.
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