A 'what to expect' from Bank of America Merrill Lynch. To cut to the chase for the EUR:

  • Although we see the Euro weakening by year-end, short-term risks remain to the upside

More:

We expect the ECB this week to toughen their language marginally, by removing the easing bias on QE, while insisting on the need for prudence and a persistent monetary stimulus.

  • Sintra was not just about sending a hawkish message. It was also about expressing a healthy degree of unease at the pace of inflation normalisation and hinting that the end of QE did not mean fast normalisation in policy rates

Summing up our ECB call:

  • September pre-announcement of a decision on the future of QE in October;
  • October announcement that QE will be scaled back from EUR60bn to EUR40bn for 6m starting in January 2018;
  • regular tapering to follow in 2H18;
  • end of QE in December 2018 accompanied by a technical deposit rate hike.
  • The nature of the recent selloff and the shape of the Eonia curve suggest the market is pricing in the end of QE could be as early as June 2018. This is also supported by our survey results.