Barclays Capital FX Strategy Research notes that at its policy meeting last week, the ECB confirmed that changes to its QE program will likely be announced in October, but disappointed expectations for a possible change to the asymmetry of its asset purchase intentions.
"The market is currently pricing only about 14bp within the next two years, suggesting that the repeated calls for patience by the ECB have succeeded in ruling out expectations related to violations of ”sequencing,” and the ECB is widely expected to start hiking the repo only after asset purchases are ended," Barclays argues.
On the EUR front, Barclays notes that the single currency has appreciated broadly in response, calling into question Barclays's expectations for a change in narrative about relative central bank prospects that could bring about a tactical reversal in the EUR/USD.
Source: Barclays ResearchOriginal Article
