Investors Bet ECB’s Next Steps Will Strengthen Euro

Even if the European Central Bank delivers a dose of monetary stimulus as widely expected on Thursday, the euro could still climb, analysts warn, leading banks to advise clients to trim any bets against the currency, the Financial Times reported. Typically, interest-rate cuts and blasts of supportive bond buying drag down currencies. But levels of conviction that ECB president Mario Draghi will unleash a heavy-hitting package of measures are so high, that any sense the central bank has not gone far enough could be brutal. Options markets are pricing in a 0.15 percentage point cut in the deposit rate, which currently stands at -0.4 per cent. A relaunch of the bank’s asset-purchasing programme is also seen as a highly likely move, while tweaks to the ECB’s forward guidance are also a possibility. Read more