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ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

Market report
Plans by the government to backtrack on the controversial Ogden rate changes, which have slashed the earnings of UK insurers, lifted heavily-exposed Direct Line on the FTSE 100.
The government said yesterday that if the rate, which concerns personal injury claims, were set today it would “fall within the range of 0pc to 1pc”, meaning smaller compensation claims for insurers to pay and higher earnings.
Insurers’ shares tumbled when the Government announced in February that the Ogden rate would drop to -0.75pc from 2.5pc with the fall forcing Direct Line to report significantly smaller profits and halve its dividend. The move was heavily criticised within the sector with the Association of British Insurers’ director general Huw Evans describing the plans as “crazy”.
Commenting on the effect on motor insurance, Jefferies analyst Philip Kett warned that the “the legal obstacles to this change will be considerable” but added that the changes would pull down motor insurance prices.
Buoyed by the policy u-turn, Direct Line and Hastings Group climbed 8p to 379.6p and 3.9p to 305.8p, respectively, but Admiral reversed 37p to ?18.38 after being weakened by going ex-dividend yesterday.
Elsewhere, tobacco giant Imperial Brands’ disposal of another 10pc stake in Spanish distributor Logista was taken as a shrewd piece of portfolio management in the City, lifting its shares 90p to ?33.
Imperial said that the ?231m sale of the non-core stake will be used to pay down debt and conduct a share buyback with Jefferies analyst Owen Bennett praising the company for using the money to reward shareholders rather than cheaply lifting its earnings.
He added, however, that one concern is that the buyback implies that the company has no deals are currently in its pipeline. 
Housebuilders continued to be this week’s big movers in London with blue-chip firm Barratt Developments clawing back 13p at 608.5p and Bovis Homes jumping 109p to ?11.61, a 10.4pc rally, as investors cheered new boss Greg Fitzgerald’s turnaround plan.
A broad-based rebound helped the wider FTSE 100 finish in positive territory for the first time this week, closing 42.85 points higher at 7396.98.
On the currency markets the pound’s stumble towards parity with the euro took further impetus after European Central Bank president Mario Draghi revealed that the Governing Council will make the “bulk” of its decisions on tapering its ˆ60bn-a-month quantitative easing programme in October. 
The euro surged on forex markets even as Mr Draghi warned against the strength of the currency, which has advanced 7.4pc against the dollar since the ECB president first teased markets by hinting earlier this summer of an imminent shift in policy. 
5:51PM
Markets wrap: ECB kicks the can down the road on quantitative easing
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

Mario Draghi has kicked the can down the road on revealing the ECB's plans on quantitative easing
The euro has surged on the currency markets after ECB president Mario Draghi revealed that the "bulk" of the central bank's decision on the fate of its ˆ60bn-a-month quantitative easing programme will made in October.
Despite Mr Draghi calling the euro's recent volatility and strength a "source of uncertainty", the currency pushed past $1.20 against the dollar. The pound, meanwhile, retreated to back below ˆ1.09, as it took another knock on its drift towards parity with the euro.
Elsewhere, the FTSE 100 snapped its losing streak and rose higher for the first time this week. Insurers jumped on the government proposing another change to the Ogden rate while housebuilder Bovis Homes soared over 10pc to the top of the FTSE 250 after unveiling its turnaround plan.
IG market analyst Joshua Mahony said this on today's markets:

"European stock markets have maintained their early gains today, despite a sharp appreciation in the value of the pound and euro in the wake of the latest ECB monetary policy meeting. With the ECB holding rates and QE steady, the focus promptly shifted towards the committee forecasts and any clues as to QE withdrawal timeline.
"Today’s big mover came in the form of the euro, which spiked sharply after the 2017 growth forecasts were revised higher to put the eurozone on track for the fastest growth since 2007 (2.2%). With monetary tightening on the cards, Mario Draghi’s job just became more difficult as he attempts to talk down the euro while attempting to withdraw the current substantial  monetary policy stimulus."
4:46PM
The most affordable London boroughs for graduate renters in 2017 
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

Croydon is one of the most affordable boroughs in London for graduates looking to move to the capital
Thousands of graduates across the UK will move to London this month in the hopes of embarking on a successful career, but many will face the extortionate rents and living costs associated with living in the capital.
Data by the think tank Centre for Cities published last year revealed that 22pc of graduates who had moved within six months of finishing their degrees were living in London and had found work. 
But those who make the move to the capital risk losing more than 45pc of their monthly salary – which is ?1,972 after tax, on average – to rent, according to the latest Landbay Rental Index.
Read Sophie Christie's full report here
4:19PM
Jaguar Land Rover warns UK Government it risks being left behind by the electric car revolution
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

Jaguar Land Rover is Britain's biggest car maker
Jaguar Land Rover has challenged the Government to create a business environment where car manufacturers can flourish by developing electric, autonomous and connected vehicles - and warned of the “harsh dangers” of not doing so.
Speaking at an event in London, JLR chief executive Ralf Speth said the company will electrify its range from 2020 but warned of the risks of technological advances in cars, such as self-driving systems.
“The UK has the intellect, imagination and ideas - it always has,” he said. “But history tells us often that it has failed on delivery. In this new mobility revolution, if there is not a nimblesness in response, the danger of failure is too harsh to contemplate.”
Read Alan Tovey's full report here
4:05PM
ECB policy meeting reaction: October timing makes sense; performance was classic Draghi
DRAGHI SAYS WE DON'T SEE NEGATIVE EFFECTS OF QE pic.twitter.com/Js1cf3aeu4— zerohedge (@zerohedge) September 7, 2017
.@ecb #Draghi worried about FX volatility. Realsed vol has risen, but not excessive and much lower than in the run up to QE pic.twitter.com/o7Sor60HNp— Paul Mortimer-Lee (@MortimerleePaul) September 7, 2017
Here are a few more interesting comments on Mario Draghi revealing that the ECB will make the "bulk" of its decisions on the fate of QE in October.
Let's begin with Lukman Otunuga, research analyst at FXTM:

"The real action started during Mario Draghi’s press conference, where Euro bulls and bears were engaged in a fierce tug of war as investors tried to get a fix on the implications of his speech.
"Although Draghi stated that the recent volatility in the Euro required close attention and is a source of uncertainty, he skillfully prepared the market to expect a QE tapering announcement in October. However, if the Euro continues to trade higher, it could be pushed out to December."   

City Index analyst Fiona Cincotta said that delaying until October was a shrewd move by Mr Draghi:

"The fact that the ECB have finally started to discuss the winding down of QE also supported the euro. Discussion were very preliminary, but the market was just relieved to know that they have started. October still looks to be the month when more information will come regarding the winding down of the bond buying programme and that actually makes sense.
"By October the German elections will be out of the way, the Federal Reserve will have met and there will also be another month of economic data to support a decision. And investors were happy to focus on just that – tapering to be discussed next month and no real talk down of the euro."

The performance was vintage Draghi, according to Martin Arnold, FX and macro strategist at ETF Securities: 

"This was classic Draghi at the press conference: very balanced regarding the economic outlook but very vague regarding the future path for policy. We expect the market continues to largely misjudge how cautious the ECB remains in withdrawing stimulus and this could see an unwind of the overstretched long Euro trade.  
"The ECB remains in wait and see mode on inflation given the downside risks and although Draghi was certainly not hawkish in his policy commitment (and therefore bullish on the Euro), the broad based weakness of the USD was a contributor to the strong move higher in EUR/USD."
3:37PM
Debenhams senior director departs in department store reshuffle
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

Debenhams said that Suzanne Harlow's trading director job no longer exists
Debenhams has parted ways with one of its longest-serving directors as part of new boss Sergio Bucher's attempt to revive and overhaul the department store chain.
Suzanne Harlow, who has been with the business for 23 years and trading director since 2013, had been tipped as the sole internal candidate to take the helm of Debenhams when Michael Sharp stepped down in October 2015 after four years of declining profits
Instead, the department store named former Amazon fashion boss and senior Nike director Sergio Bucher as its next chief executive.
Read Ashley Armstrong's full report here
3:15PM
ECB monetary policy decision takeaways
The European Central bank has left monetary policy unchanged. Interest rates continue at 0pc while its ˆ60bn-a-month quantitative easing programme will remain in place until at least the end of the year.
Mario Draghi said that the central bank will make the bulk of its decisions on QE in October.
The ECB revised down its forecasts on inflation. It now expects inflation to be 1.5pc in 2017 compared to its previous estimate  of 1.6pc.
It expects growth this year to be 2.2pc, the currency bloc's fastest rate since 2007.
The euro rallied on currency markets in reaction to the press conference, jumping 0.7pc higher against the dollar to above $1.20.
2:53PM
ECB press conference snap reaction
What do #Draghi #ECB want to know to decide on QE 2018: level of EUR & impact on inflation hence doing 2nd part of announcement only in Dec— William De Vijlder (@DeVijlder) September 7, 2017
Let's have a quick round up of the reaction to the news that the ECB is set to reveal its quantitative easing plans in October.
Pantheon Macro chief eurozone economist Claus Vistesen isn't convinced by the October timeframe:

"Mr, Draghi hinted that the ECB probably will be able to signal how it intends to tweak QE in October. Our base case before today was December, but we’re not willing to die on this hill.
"We would simply note, though, that if the euro continues to trade higher, it would increase the risk that the ECB has to wait until December. In addition, the ECB usually makes these kind of announcements around new economic projections."

Today's appearance was a job well done by Mr Draghi, according to ETX Capital analyst Neil Wilson.
He said:

"Mission largely accomplished: Mario Draghi successfully guided the market to expect a tapering announcement in October without sounding hawkish. No move on QE yet but the ECB will outline the next steps for monetary policy at its next meeting in October. At this meeting there were only very preliminary discussions about the length of the programme and the size of monthly purchases, which Mario Draghi said were mostly about ‘asking questions’ rather than answering them.
"But overall a sense that despite dissatisfaction about inflation, the ECB thinks it will be ready to announce some degree of tapering next month, which has been enough to lift the euro above $1.20 again to retest its highest levels since Dec 2014."
2:41PM
There are no negative effects of QE, says Draghi
So that's that. Draghi says he expects ECB will finally hit its inflation target in 2020, the year after he steps down.— Claire Jones (@senoj_erialc) September 7, 2017
Super Mario Draghi talked but said little new. As the leaks suggested, the calibration of the asset purchases will be announced next month.— Kevin R. Kelly (@KevinRKelly_) September 7, 2017
The last couple of questions are largely retracing over what was discussed in the first half of the conference.
We're at the final question now. What are the negative effects of quantitative easing?
Mr Draghi replies: "We don't see any negative effects from quantitative easing."
Negative interest rates do have side effects but these are offset by the benefits, he adds.
And with that it finishes. That final defence of QE should a get a few people riled up.
Against the dollar, the euro has finished the conference 0.7pc higher just above $1.20. The pound pared some of its mid-conference lows and is currently trading 0.3pc lower against the euro at ˆ1.0908.
@ecb Draghi: No real evidence of neg impact of QE. Neg int rates aren't down to QE, nonetheless offset by positive growth pic— Harry Daniels (@HarryDaniels71) September 7, 2017
2:25PM
Nothing will derail the ECB's will to reach target inflation, says Mr Draghi
RT business "Appreciation of the euro is a risk that warrants close attention, ECB's Mario Draghi says … pic.twitter.com/FV1zaYcw5E"— Victoria BigAss (@victorialomba_1) September 7, 2017
It's hard for people to understand why monetary policy is so loose when GDP growth is at its highest since 2007, a reporter says to Mr Draghi 
He says it's because we are not there yet on inflation. Nothing will derail the ECB's will to reach target inflation, says Mr Draghi.
'Nothing Will Derail' #Draghi— Todd Buell (@ToddBuell) September 7, 2017
2:18PM
We should be ready in October on QE, says Draghi 
Draghi: "we should be ready when I said" -- that can be read 2 ways— Axel Merk (@AxelMerk) September 7, 2017
#Draghi: "In October we should be ready, but if we are not we postpone"— Maxime Sbaihi (@MxSba) September 7, 2017
The ECB should be ready to present QE plans in October but the central bank will postpone if need be, says Mr Draghi to a question on why he won't wait until December to announce its plans.
Draghi using 1.18 EURUSD exchange rate. Is the #ECB behind the curve?— SrinivasRamakrishnan (@Neuschwan) September 7, 2017
2:11PM
We are not in a period of great uncertainty, says Draghi
Draghi: "I don't think that we are in a period of great uncertainty". Not exactly dovish.— Frederik Ducrozet (@fwred) September 7, 2017
#Draghi : I do not think we are in a period of great uncertainty#ECB @ForexLive pic.twitter.com/KNfkolgLIA— Victor Leonardi (@VICTORLEONARDIB) September 7, 2017
Mr Draghi is asked why the ECB doesn't publish forecasts on interest rates like some other countries do.
He's not sure it does reduce uncertainty and adds that he doesn't think we are in a period of great uncertainty.
He refuses to answer a question on what the true value of the euro exchange rate is.
2:06PM
No systemic danger from bubbles in the market, says Draghi
#Draghi: "The exchange rate is not a policy target but it is very important for the medium term outlook for #inflation" #ECB #EU— Action Institute (@ActionItalia) September 7, 2017
Q to Draghi: isn't it your job to provide clarity rather than push decision on tapering? Draghi: we aren't ready, wait for October— Axel Merk (@AxelMerk) September 7, 2017
Mr Draghi is asked on bubbles in the market, which was highlighted by Deutsche Bank's chief executive John Cryan as a concern yesterday.
There is no systemic danger from bubbles, replies Mr Draghi. He says that prime commercial real estate is the only area where valuations are overstretched.
RT business "Euro jumps above $1.20 as Mario Draghi's news conference continues https://t.co/xvLKLB3WOA pic.twitter.com/wxU8mA9rUk"— Victoria BigAss (@victorialomba_1) September 7, 2017
1:58PM
Euro is lifted by Draghi press conference 
Draghi: bulk of opinions likely to be taken in October (announcement of tapering)— Axel Merk (@AxelMerk) September 7, 2017
So far Mr Draghi's conference has lifted the euro with the pound down to below ˆ1.09 against the currency, a 0.6pc drop.
Draghi's tone of expressing confidence in economic outlook is stronger than concern of high #euro.
Euro will rise unless data deteriorates— Brent Carlile (@BrentCarlileFX) September 7, 2017
ECB's Draghi (Q&A): Pros and cons of different scenarios were discussed.— Sigma Squawk (@SigmaSquawk) September 7, 2017
1:55PM
The bulk of QE decisions will be taken in October, says Draghi
DRAGHI SAYS BROAD CONSENSUS THAT RECENT VOLATILITY IN FX RATE A SOURCE OF UNCERTAINTY— Hartswell Capital (@hartswellcap) September 7, 2017
The ECB has had very preliminary discussions on different scenarios regarding the quantitative easing programme including the length and size of the stimulus, says Draghi.
He is asked on whether more information will be due at the meetings in October and December.
Mr Draghi replied that the bulk of QE decisions will be taken in October.
*DRAGHI SAYS ECB DISCUSSION ON QE COVERED LENGTH, SIZE OF PLAN
*DRAGHI SAYS ECB DISCUSSED PROS AND CONS OF VARIOUS QE SCENARIOS— Doum (@DoumDoom) September 7, 2017
1:50PM
Inflation will eventually converge with growth
Draghi doing the structural reform dance now, as is tradition.— ForexLive (@ForexLive) September 7, 2017
ECB's Draghi (Q&A): Eurozone recovery is robust and broad based.— Sigma Squawk (@SigmaSquawk) September 7, 2017
It's the Q&A now.
Inflation will eventually converge with growth but patience is needed and stimulus needs to remain, says Draghi.
There was a broad dissatisfaction at the central bank on current levels of inflation, he added.
He says that the euro is very important to growth and inflation rates.
1:43PM
Inflation forecasts downgraded due to euro's strength
LiveSquawk: ECB’s Draghi: 2017 Inflation Forecast Unchanged At 1.5%
-2018 Inflation Seen At 1.2% From 1.3%
-2019 Inflation Seen At 1.5% Fr…— Value's Vector (@pulpmarkets) September 7, 2017
ECB revises GDP forecast for 2017 to 2.2pc, fastest rate since 2007.
Inflation forecast revised down due to euro's strength, says Draghi.
Inflation forecast for 2017 downgraded to 1.5pc from 1.6pc while 2018 forecast down to 1.2pc from 1.3pc.
1:38PM
Euro volatility is a source of uncertainty, says Draghi
Draghi: very substantial degree of monetary support still needed— Philip Aldrick (@PhilAldrick) September 7, 2017
Draghi doing his best to talk down euro -- no sign of end to QE, no change in rates till well after QE ends and ECB monitoring ˆ volatility.— the belgian dentist (@belgiandentists) September 7, 2017
The press conference has started and the euro is bouncing around on the currency markets.
Mario Draghi has just emphasised that monetary stimulus is needed to support inflation, saying that the eurozone's strength, while broad-based, has not translated to higher inflation.
"Recent euro volatility is a source of uncertainty," said Mr Draghi on the recent surge in the currency.
1:31PM
Watch Mario Draghi's press conference at the ECB
1:16PM
Markets await Draghi press conference
Watch ECB President Mario Draghi explain today’s monetary policy decisions from 14:30 CET https://t.co/hdm97yBzqE pic.twitter.com/8MAZdU0eTL— ECB (@ecb) September 7, 2017
Pantheon Macro's chief eurozone economist Claus Vistesen said not to expect fireworks at the press conference at 1.30pm (BST):

"We think the ECB will signal today that it is taking working groups to come up with proposals to be delivered in Q4, but otherwise that all options are on the table. We think the central bank is trying to send the message that the degree of stimulus will be dialled down as the economy improves, but not removed altogether. 
"That said, Mr. Draghi’s communication challenge is tricky. Today’s press conference will be accompanied by the updated staff projections, which likely will show that the ECB has downgraded its core inflation forecasts again, mainly in response to the appreciation of the euro. Mr. Draghi will be forced to answer just how worried the ECB is about the stronger euro, where we think he will repeat what he usually says: 
1:01PM
Main course at the ECB due at the bottom of the hour
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

Mr Draghi will speak at 1.30pm on the central bank's latest decision
CTRL C + CTRL V pic.twitter.com/6jwWENoJot— Katie Martin (@katie_martin_fx) September 7, 2017
I must admit that wasn't terribly interesting but don't worry that was just a little appetiser for the markets.
Mario Draghi is due to speak and take questions from the media at the bottom of the hour. That's when analysts believe markets could move.
ECB Leaves rates and QE on hold#ECB #EUR #DRAGHI pic.twitter.com/XE0FzSeFsm— Sigma Squawk (@SigmaSquawk) September 7, 2017
Capital Economics' chief European economist Jennifer McKeown believes that Mr Draghi's conference will strengthen tapering hopes.
She said:

"Today’s statement is exactly the same as July’s, with interest rates on hold as expected and asset purchases of ˆ60bn per month set to go on until the end of this year “or beyond, if necessary”.
"If new plans were going to be announced today, experience suggests that the Bank would have published the details (or at least a firm indication of what was to come) in the statement, rather than wait until the press conference. So while the ECB had previously been expected to unveil tapering plans at this meeting, expectations that the euro’s rise had cemented the case to hold off appear to have been correct"

Naeem Aslam, chief market analyst at ThinkMarkets, gave his review of the decision:

"No hurricane created by the ECB minutes as the bank left the monetary policy unchanged as expected. Investors are going to pay close attention to the Draghi’s tone during his press conference. They will try to gather if the president will talk down the euro.  
"Traders quickly booked some of their profit on the back of the slightly dovish ECB minutes.  It is widely expected that the president would talk down the currency. There is a little evidence that the strength in the currency could choke the economic growth in the medium term. We believe his focus will be more towards the domestic demand. The pace of gradual reduction of the monetary stimulus would impact the sentiment which is driving the euro rally."
12:49PM
ECB leaves monetary policy unchanged
ECB leaves interest rates at 0pc andˆ60bn-a-month quantitative easing programme in place until at least the end of the year.
No change and no surprise but it will be Mario Draghi's press conference that could steal all the headlines in 45 minutes.
Until then here's what the ECB has put out in the last few moments:

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.
Regarding non-standard monetary policy measures, the Governing Council confirms that the net asset purchases, at the current monthly pace of ˆ60 billion, are intended to run until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. The net purchases are made alongside reinvestments of the principal payments from maturing securities purchased under the asset purchase programme. If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the programme in terms of size and/or duration.
12:34PM
ECB monetary policy decision — what to expect
The ECB could announce today that it will soon taper its ˆ60bn-a-month quantitative easing programme as the eurozone's recovery goes from strength to strength.
The majority of economists believe, however, that the central bank will hold off until at least October and possibly as late as December.
The ECB is worried that inflation is too weak to withstand tighter monetary policy and the recent surge in the euro has added to the concerns.
Ahead of the decision due at 12.45pm, the euro is climbing on forex markets. Against the currency, the pound has fallen to ˆ1.0925.
Post-decision press conference at 1.30pm could stoke movement on the currency markets.
A change in interest rates is off the table; they will remain at 0pc. 
12:11PM
Debt ceiling deal in US lifts mood on the markets
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

Donald Trump surprised analysts by agreeing a deal to extend the debt ceiling
US president Donald Trump's deal yesterday with the Democrats to extend the debt limit in the US and secure government funding until mid-December has lifted the mood on the markets, according to Swissquote analyst Peter Rosenstreich.
He commented:

"This was a massive first step. True, it was tied to relief assistance for victims of Hurricane Harvey, but still, the path towards meaningful tax reform (and potentially other stimulus) just got a little less steep.
"We were perhaps premature in writing off the Trump pro-growth, reflation story – a shift to the center, highlighted by this 3-month extension, could be the start of something real. A unified US government could have profound effects on our market outlook."

Mr Trump agreeing the deal with the Democrats hasn't gone down well in his party with house speaker and Republican Paul Ryan calling it "disgraceful". 
TO BE CLEAR: Debt limit, govt funding expires 12/15. Ryan, McConnell, McCarthy were all opposed. Trump, Pelosi, Schumer were on same side— Jake Sherman (@JakeSherman) September 6, 2017
11:42AM
How would tapering affect stocks and companies?
#Draghi up on Deck. Ideal situation is a flush for the Euro lower to set up for a massive rally. Equities higher for trap gold lower for Buy— DT (@DTBME1209) September 7, 2017
$eurusd is immortal even after debt ceiling agreement & NK fade out,#Draghi is helpless against strong #euro #ecb cannot stop it #ForexNews— Gpifund (@asegpi) September 7, 2017
ECB president Mario Draghi has been heavily criticised for the central bank's huge monthly asset purchases to boost growth but the central bank head vehemently defended quantitative easing at a speech in Lindau, Germany, last month. 
But how would Mr Draghi and the ECB signalling the winding down of its ˆ60 billion-a-month quantitative easing programme affect stocks and companies?
Central banks snapping up government bonds from investors through QE has the effect of forcing them to put their money into riskier assets such as corporate bonds and stocks.
Buying large amounts of government bonds also has the effect of lowering interest rates, making borrowing cheaper and stimulating the economy, which should boost companies' growth and thus push up their share prices.
The central bank is now beginning to believe that the currency bloc's economic performance is strong enough to withstand removing this stimulus although Mr Draghi will likely steadily unwind the programme to avoid shocking the market, trimming purchases of bonds rather than selling off any of the existing stock of assets bought under the QE scheme.
There is also the unknown effect of removing such stimulus on market confidence, hence Mr Draghi's very cautious approach in recent appearances.
Cricket legend Phil Tufnell giving his opinion on #Draghi and QE taper: "The ECB have got this terribly wrong" $EUR #waitingforECB https://t.co/BYDPf9bQdN— Viraj Patel (@VPatelFX) September 7, 2017
11:34AM
Zoopla snaps up another company in quest to become 'one stop shop'
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

Alex Chesterman, chief executive of Zoopla
ZPG, the parent company of property portal Zoopla, has snapped up another property technology business in its quest to become a 'one-stop shop' for buying homes. 
It bought the financial services comparison website Money.co.uk in a "cash-free, debt-free basis" deal worth up to ?140m. The site allows customers to look up more than 60 products including mortgages, loans, credit cards, bank accounts and insurance.
ZPG will pay ?80m in cash for Money, as well as a performance-based payment of up to ?60m. Its shares were up 5pc in early trading.
Read Isabelle Fraser's full report here
zoopla share chart
11:27AM
Why might the ECB delay its plan to taper its quantitative easing programme?
Happy Draghi Day Everyone! pic.twitter.com/eGLPGItAfw— Chigrl? (@chigrl) September 7, 2017
With the eurozone enjoying robust growth in 2017 and this summer's economics data supporting the idea that the currency bloc's recovery is in full swing, why would the ECB not want to remove its stimulus packages and normalise monetary policy?
The main issue is that quantitative easing lifts inflation, which in the eurozone has been sluggish and remains below its 2pc target at 1.5pc.
The double effect of removing that stimulus and the rise in the euro pulling down import costs could weigh on inflation.
Since ECB president Mario Draghi first hinted at tapering the central bank's asset-purchasing programme back in late June, the euro has risen 7pc against the dollar.
Premature tightening could also slowdown the recovery in some of the more economically fragile countries in the currency bloc.
CMC Markets analyst Michael Hewson said this on today's decision.

"For several months now there has been rising speculation that the European Central Bank would look to start to prepare the ground in the coming months for a gradual tapering of monetary stimulus in the face of an improving economic outlook for the euro area.
"At the beginning of the year, and even in the middle of the second quarter this didn’t look as if it would be too much of a problem, however the gradual unwind in the Trump reflation trade and decline in the US dollar has made the ECB’s exit strategy much more problematic than it would have liked.  
"A rising currency, and a US dollar that continues to look vulnerable has seen the euro hit its highest level since 2014, not only against the greenback, but the Chinese yuan as well, thus making EU exports more expensive in two of its biggest export markets."
It's Draghi vs the currency market today! https://t.co/rTAUQOI7zW" https://t.co/99VLS8UdQ5 by @uk_tradingview on @LinkedIn— Rajan Dhall (@RajFX10) September 7, 2017
10:58AM
ECB preview: Much is riding on Mario Draghi and his press conference today
Dovish tone from #Draghi would hit #EUR and push Indexes higher— Macro_Bund (@Macro_Bund) September 7, 2017
If, as expected, the ECB delays the announcement of its quantitative easing plans, the central bank's president Mario Draghi's press conference shortly after the release of the decision will be the key focus for traders.
Mr Draghi's attempt to dampen tapering hopes has largely fallen on deaf ears of late, can he regain a bit of that market moving magic today?
Much is riding on the former investment banker today, according to IG's chief market analyst Chris Beauchamp.
He argued:

"The big question is whether he will be able to talk down the euro for anything more than a few hours, or whether markets will simply look past his words with an expectation that a renewed tapering of QE is on its way, and that it is now merely a question of time.
"We know that the euro’s strength is beginning to irk the ECB, but will irritation be enough to prompt them into a policy change? And given the widespread rush to buy eurozone stocks, and hence the euro, is there really much that the ECB can do anyway?"
#ECB meeting: can Draghi avoid a taper tantrum? Watch today, starting 15:45 UAE time, press conference following the interest rate decision pic.twitter.com/rwyr3XVwS2— Century Financial (@CFB_MarketPulse) September 7, 2017
10:28AM
House price rebound reaction: Caution needed as surveys can be volatile
Halifax UK HPI Aug-17:
3m/yoy: 2.6pc (prev 2.1pc)
mom: 1.1pc (r prev 0.7pc) pic.twitter.com/cRu1J0sG3Q— Pete Wargent (@PeteWargent) September 7, 2017
ET ITEM Club's chief economic advisor Howard Archer has warned on today's buoyant housing figures from Halifax that house price measures can be volatile and a revival in the market might not be on its way.
He explained:

"The contrast between the Halifax and Nationwide data for August highlights that house price measures can be volatile and differ from month to month between reporting agencies.
"It is therefore best not to attach too much importance to one particular survey but to try and take an overview."

Housebuilders are among the big movers in London this morning with Barratt Developments clawing back 1pc after yesterday's fall and Bovis Homes jumping 6.7pc on the unveiling of its turnaround strategy.
Meanwhile, FTSE 250 online property portal Zoopla has gained nearly 4pc on its acquisition of Money.co.uk for ?80m.
10:03AM
'Buoyancy' returns to UK housing market, as prices edge up 0.1pc – Halifax
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

The average house price in the UK now stands at ?222,293
House price growth in the UK is picking up, with property prices in the three months to August 2.6pc higher than in the same three months last year, according to Halifax.
The lender's latest house price index suggests that some "buoyancy" may be returning to the UK housing market, as house prices in the third quarter of the year were 0.1pc higher than in the second quarter. Price growth, on this measure, has edged up for the first time since March.
Despite the annual growth rate in August being higher than in July (2.1pc), it has still fallen from a peak of 10pc in March 2016 when transactions grew sharply ahead of the introduction of new higher stamp duty tax rates for buy-to-let and second homes that came into effect the following month.
The average house price in the UK now stands at ?222,293 – just above the previous high of ?222,190 in December 2016.
Read Sophie Christie's full report here
9:59AM
ECB will delay QE decision, say analysts 
economics: Draghi's claim of QE flexibility is attracting doubters https://t.co/NL5gsxUzfn pic.twitter.com/SLifFtWd6d— Value's Vector (@pulpmarkets) September 7, 2017
Draghi will probably mention euro strength but I doubt he will express concern . QE must be stopped next year .— Fernand Pignon (@FernandPignon) September 7, 2017
Let's have a quick round-up of what analysts are predicting will happen at the ECB this afternoon. 
UBS believes that the central bank will delay its tapering decision until its next meeting in late October:

"Instead, the focus of next week's meeting will be on the ECB's new staff macroeconomic forecasts. We think the key reason for staying put on 7 September is the sharp (more than 5%) rise in EUR/USD since late June – a move that the ECB will not want to turbo-charge through additional hawkish rhetoric.
"Trying to adjust its communication relatively little suggests to us that the ECB might well keep the QE easing bias in place next week."

MUFG currency analyst Lee Hardman believes that not tightening too soon is the key to dampening the euro's strength:

"The ECB is currently signalling that rates will not begin to rise until well after the end of QE. The sharp strengthening of the euro has prompted the market to push back expectations for an ECB rate hike into 2019 which suggests that the market views their guidance as credible.
"A slower pace of QE and/or rate hikes in the coming years is the ECB’s best chance to dampen euro strengthen. Verbal intervention on its own is unlikely to prove effective beyond the near-term"

LCG analyst Ipek Ozkardeskaya gave this preview:

"According to the latest news, the ECB’s technical committee created different QE scenarios on the size and the duration of the program and none of them is identified as a preferred scenario.
"The announcement will likely be delayed to next month’s meeting due to the strong euro, low inflation and global risks. This week’s press conference could be about what President Mario Draghi won’t say."
9:39AM
Investors rally for beleaguered Bovis as new boss sets out strategy to fix the company
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

Bovis shares jumped over 6pc in intraday trading following its results
Bovis Homes' share price has soared more than 8pc as its new chief executive updated investors on his strategic review, which will include building fewer homes and paying out more cash to shareholders, in an attempt to get the beleaguered housebuilder back on track. 
Greg Fitzgerald, who joined the company in May, described Bovis's problems as "very fixable". 
He said that he would streamline the business and its balance sheet, reducing the number of employees, disposing of developments outside its core areas, and lowering infrastructure spending. 
He also added that the company would merge operating regions to create seven key areas, and that the business would aim to build just 4,000 homes a year, a step down from the high-volume model in which the company aimed to build up to 6,000 per annum. To please investors, the company will hike its dividend and plans to pay out special dividends totalling ?180m by 2020.
Read Isabelle Fraser's full report here
Bovis Homes
9:25AM
Eurozone government bond yields move higher ahead of key ECB decision
It's the big ECB meeting today. What are Draghi's options? pic.twitter.com/89cMvjVj9X— ING Economics (@ING_Economics) September 7, 2017
In anticipation of the decision at the ECB, eurozone government bond yields have jumped higher and a nervy euro is bouncing around on currency markets this morning.
The euro suddenly spiked higher at just after 8.30am as traders appeared to get very excited by Reuters' news feed saying that the decision would be due after 12.45pm rather than bang on the dot like normal.
The newswire agency has since corrected the mistake and emphasised that the decision is expected to drop on time. Traders really are itching for something, aren't they?
Euro jumps on RTRS headline that #ECB says MonPol decisions to be issued AFTER 1345 CET. Now it's AT 13:45 CET. Maybe something is changing? pic.twitter.com/HkL64W8qIN— Holger Zschaepitz (@Schuldensuehner) September 7, 2017
9:13AM
Markets were largely unconvinced by Draghi's insistence on maintaining QE at the last policy decision
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

Deutsche Bank chief executive John Cryan said yesterday that the "era of cheap money in Europe should come to an end"
Markets at the last policy meeting in July were largely unconvinced by Mr Draghi emphasising the need to continue the ECB's large quantitative easing programme with the euro still jumping to an eight-month high against the pound.  
Even if the ECB delays its QE plans, a bullish phase on the eurozone’s strength could still send the euro soaring or a cautious word on inflation could send it sinking on currency markets. 
Worries that the euro’s strength will weigh too heavily on the currency bloc’s inflation figures are thought to be the main roadblock within the central bank but the strength of the region’s recovery has created a growing clamour for tighter monetary policy. 
Thursday we get to see Mario Draghi do the central bank 2 step:
"Everything is awesome, but I got to keep QE running at crisis levels".— Sven Henrich (@NorthmanTrader) September 6, 2017
Yesterday Deutsche Bank chief executive John Cryan and Germany’s finance minister Wolfgang Schauble both used a conference in Frankfurt to call for a shift in policy with the former saying that the “era of cheap money in Europe should come to an end” even with the current strength of the euro, which has spent the summer advancing towards parity with the pound.
right #mariodraghi let's see your hand ! Oh, the whole planet knows what you've got already. Good luck with that #unwind— Peter G. Walsh (@pgwalsh) September 7, 2017
8:54AM
Tinker, taper, QE, bye?
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

Some analysts believe the central bank will now hold off until December before revealing its quantitative easing plans
The consensus of economists believe that the ECB will hold off from revealing its plans to taper the central bank's ˆ60bn-a-month quantitative easing programme until at least October (some believe it will now wait until December) but the markets as always will hang to every word from ECB president Mario Draghi’s lips for any subtle shift in tone. 
Mr Draghi’s fingers were burnt earlier in the summer when the euro soared after he hinted that the central bank’s policy would soon change due to the eurozone’s strength and since then he has remained tight-lipped, giving little away in the last policy decision or at his appearance at the Jackson Hole conference.
If the QE tapering plans are not revealed today, the ECB's revised forecasts on inflation and growth will be worth keeping an eye on this afternoon to see if the central bank believes that the strong euro will weigh too heavily on already sluggish inflation.
How does quantitative easing work?
8:34AM
Agenda: Key ECB monetary policy decision dominates markets
ECB to decide fate of quantitative easing in October; pound drops to ˆ1.09 against euro

The ECB could wait until December to reveal its plans for its QE programme
Welcome to our live markets coverage.
After a summer of speculation and crucially a stronger euro, today's ECB policy decision could end up being a non-event but the markets will still be hanging onto the central bank's president Mario Draghi's every word.
Mr Draghi and co are expected to hold off from tightening monetary policy this time but traders will be hunting for any clues on the central bank's prognosis on inflation and growth.
Ahead of the key decision due at 12.45pm, the pound has nudged down to ˆ1.0928 against the euro, the main culprit for the ECB holding off from tapering its quantitative easing programme.
Asian markets rise on relief over surprising US debt ceiling deal eliminating near-term risk of a govt shutdown. Oil jumps. Euro eyes #ECB. pic.twitter.com/7iG7iVzAHt— Holger Zschaepitz (@Schuldensuehner) September 7, 2017
Away from the action in Frankfurt, the FTSE 100 has edged up into positive territory with tobacco giant Imperial Brands jumping to the top of the leaderboard after selling a 10pc stake in Logista for?231m.
The mining stocks are weighing on the index most early on while on the FTSE 250 Bovis Homes' turnaround plan has been well-received by investors, its shares popping 6.3pc.
Interim results: Brady, Molins, International Public Partnership
Full-year results: Frontier Developments
AGM: Nakama Group, Sophos Group, Imaginatik, Alpha Real Trust
Economics: Halifax HPI m/m (UK), NIESR GDP Estimate (UK), RICS House Price Balance (UK), Unemployment Claims (US), Revised Nonfarm Productivity q/q (US), Revised Unit Labor Costs q/q (US), ECB Policy Meeting (EU), Industrial Production m/m (GER)

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