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Draghi Seen Embracing More Before Less QE as Inflation Edges Up

(Bloomberg) Mario Draghi will have to go the extra mile on quantitative easing before he can think of slowing down, economists say.

Seventy-eight percent of the 50 economists surveyed by Bloomberg from Oct. 7-14 forecast the ECB will announce fresh stimulus, and nine in ten of those say it will happen in December at the earliest. Few expect action when the 25-member Governing Council meets in Frankfurt on Thursday to set policy.

The share of those predicting an extension of asset purchases has increased since the central bank’s last policy meeting in September. At the same time, fewer see more rate cuts on the horizon as concerns mount that negative rates are squeezing profitability for the region’s lenders.

Seventy-three percent of survey respondents said the ECB will change its QE parameters.

(Reuters) A stable but lackluster economic outlook will push the European Central Bank to tweak its asset purchase program and announce an extension by year-end, although economists polled by Reuters said a move was unlikely next week.

Over 90 percent of the economists in Reuters poll (conducted over the past week) who had a view on what the ECB would likely do by year-end, picked an extension to the QE program beyond March 2017 as the most likely option.

Almost half of them said some changes in the technical parameters of QE was probable too.

Dollar Extends Its Retreat From Seven-Month High

A gauge of the dollar extended its retreat from a seven-month high on speculation U.S. monetary policy will remain accommodative.

The greenback declined against almost all of its Group-of-10 peers after a measure of manufacturing in New York unexpectedly shrank, while nationwide factory output expanded. Federal Reserve Chair Janet Yellen last week laid out arguments for keeping monetary policy easy without taking an interest-rate hike off the table this year. New Zealand’s dollar led the gains after third-quarter inflation came in higher than forecast, fueling bets the Reserve Bank will refrain from easing beyond next month.

Traders see a 66 percent probability the Fed will tighten policy by December and about 50 percent odds for at least one more rate increase by the end of next year.

Japan finance minister Aso: Closely watching FX moves

Japanese Finance Minister Aso is crossing the wires, noting that the Ministry of Finance is closely watching FX moves, Reuters reports. He also added that excess FX volatility would hurt the economy.

Oil prices rose early on Tuesday

Oil prices rose early on Tuesday as some analysts said markets might not be quite as oversupplied as suggested by many, with global inventories rising less than expected ahead of the high-demand winter heating season in the northern hemisphere.

U.S. West Texas Intermediate (WTI) crude CLc1 was up 40 cents, or 0.8 percent, at $50.34 a barrel.

Reference: Bloomberg,Forexlive,Reuters