German growth downgraded
The ECB decision tomorrow is the main event this week. Economists are still looking for QE but all the leaks suggest it isn’t coming and the rebound in bond yields lately is at least partly due to the belief that the central bank will keep its powder dry on QE (while extending forward guidance and cutting the deposit rate).
There’s a bigger trend in euro is towards fiscal stimulus and growth as the driver. There was more talk of soft German growth as IfW and DIW both cut forecasts today and now see 1.4-1.7% growth next year.
I fear that the ECB is going towards a hard pivot to a stance where they aggressively stand their ground and implore governments to take up the mantle. That’s the kind of thing that could lead to an ugly drop in the euro.