QE looking increasingly likely in Europe

The euro remains a big talking point with investors focusing on the developments from yesterday’s European Court of Justice on the OMT programme.

Source: Bloomberg

The OMT was ruled to be in line with the EU Treaty, as long as some conditions are met. The main points were that the OMT was deemed necessary and proportionate given the ECB won’t be taking risks that leave it vulnerable to insolvency. Many analysts feel this paves the way for QE with growing calls for sovereign bond purchases to be announced next week. While bonds have been enjoying some buying interest with yields dropping in anticipation of buying, the euro is still seeing weakness. EUR/USD traded to a low of $1.1728 yesterday and while support in that region continues to hold, it is likely to be tested again in the near term.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.