ECB thinking about withdrawing from net asset purchases - AmpGFX

Greg Gibbs, Founder, Analyst, & PM at Amplifying Global FX Capital Pty Ltd explained that ECB’s Praet signalled that the ECB is thinking about withdrawing from net asset purchases soon. 

Key Quotes:

"We should expect a plan at the next Governing Council meeting on 14-June for the APP beyond its current completion date in September. "

"Praet’s upbeat view on the Eurozone’s growth and progress on convergence to the ECB’s inflation target made no mention of the political upheaval in Italy and contagion to Eurozone financial markets, or the threat from US trade policy. "

"A key question is how would Italian credit spreads cope with the threat of fiscal expansion in Italy that defies EU rules in an environment where the ECB is no longer buying Italian assets."

"EUR has lifted on Praet’s comments, bringing forward rate hike expectations more clearly into next year.  However wider credit spreads in the Eurozone have probably limited the upside for EUR.  A weakening ECB commitment to QE will not necessarily be good news for the EUR as the year progresses."