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- ECB: PEPP expansion to lift EUR/USD – TDS
ECB: PEPP expansion to lift EUR/USD – TDS
FXStreet reports that economists at TD Securities explain how the EUR/USD pair, which trades just above the 1.12 level, could react to four different scenarios after the ECB meeting tomorrow at 11:45 GMT. A PEPP expansion may actually boost the euro further near-term if the ECB adds to investor confidence.
“More Hawkish (10%):No further policy easing as ECB delays its Pandemic Emergency Purchase Programme (PEPP) decision until Sept. EUR/USD at 1.1020.”
“Hawkish (30%): €250-300 billion for PEPP. Door open to more as needed. Confirms reinvestments. EUR/USD at 1.1115.”
“Base Case (50%): Rates on hold. ECB adds €500 billion to PEPP, buying until ‘the first half of 2021.’ EUR/USD at 1.1255.”
“Dovish (10%): ECB doubles PEPP, adding €750 billion, running to mid-2021. Reinvestments for PEPP to continue until just before the first rate hike. EUR/USD at 1.1305.”
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