Language Test For The ECB

Since the start of 2021, the EUR has suffered to the downside due to the EU’s failure in the vaccination rollout. However, the picture has started to change in recent weeks. Now, the EU vaccination roll out is on course to cover 70% of the adult population by the end of July.

Incoming activity data suggests that the impact of the virus has been less damaging on the economy than previously feared. As a result, there has been some repricing for the euro and european equities.

This week – as a result of the better-than-expected performance – the ECB is expected to upgrade its economic projections. The market will also focus on what the bank has to say about the future of its PEPP purchases.

ECB members have been vocal about not signalling that its easing policy will tighten anytime soon. Therefore, the language from the meeting will be of the highest importance. Otherwise, it runs the risk of undoing much of the ECB’s hard work to keep a lid on tapering expectations.

We’ll analyse this in further detail in this week’s video.