Speculation about €QE expansion put EUR under pressure

A number of central banker's speeches and the euro zone PMI are likely to provide some insight today on whether ECB is going to ease its monetary policy again. In the end it all centres on the question to what extent the euro zone economies have been affected by the volatility on the global financial markets and the weak demand in particular from the Emerging Markets. 

Of course the euro plays a key role in this context. After all the depreciation of the euro into Q1 2015 meant that so far the euro zone economy has stood up quite well despite weak global demand. However, in the absence of further depreciation this effect will not be sustainable, a development that in view of the current risks in the Emerging Markets is threatening to put pressure on inflation, argues Commerzbank. 

At the last press conference ECB President Mario Draghi had pointed out exactly these risks in a surprisingly outspoken manner. The fact that these are increasingly materialising should be reflected in falling PMIs today. The PMIs data are expected at 51.5 below consensus expectation of 52, says Commerzbank.

"Weak euro zone data increases the likelihood that the ECB might have to adjust its economic outlook to the downside as early as December. A downward correction will be accompanied by a further easing of monetary policy. Speculation of this nature is therefore likely to put pressure on EUR today", added Commerzbank. 

In particular if Draghi once again underlines the ECB's willingness to act again at today's hearing in front of the EU parliament.