EURUSD Dumps'n'Pumps After ECB QE Decision Delay, Inflation Cut Leaks Reported

Last week Reuters provided the outlet for leaked comments from The ECB (regarding QE) that sparked chaos in EURUSD. This week it is Bloomber who reports sources suggesting The ECB will cut inflation outlooks (pouring cold water on Draghi's "reflationary forces" hoopla) and seemingly confirming The ECB will kick the can on the decision to taper QE into 2018.

As Bloomberg reports, ECB Governing Council has been presented with documents outlining multiple scenarios for adjusting quantitative easing, according to euro-area officials familiar with the matter.

  • Papers were put together by the ECB’s technical committees for the two-day meeting that starts Wednesday, and include different combinations for the size and duration of asset purchases, the people say
  • Documents don’t identify a preferred scenario and aren’t intended as formal policy proposals, people say
  • A decision doesn’t currently look likely before the Governing Council’s Oct. 26 meeting, people say
  • Governing Council will also look at the parameters of QE, including constraints dictated by European law and the ECB’s self-imposed choice of asset classes, to gauge how much room they have for purchases, people say
  • Officials may also talk about altering their forward guidance on interest rates, one person says
  • Draft economic projections show 2017 growth forecast revised up, 2018 and 2019 inflation forecasts revised slightly lower, separate euro-area official says, citing document distributed to national central banks
  • ECB spokesman declines to comment
  • People ask not to be named because the Governing Council’s deliberations, documents are private

The reaction was a swift plunge to the day's lows followed by a surge to the day's highs, and then retracement...

 

Once again, it appears The ECB is strawman-ing the market's response ahead of the statement tomorrow... and for now, EURUSD is entirely unimpressed.