###POV. On Thursday, the ECB must weigh....>

ECB VIEW: ###POV. On Thursday, the ECB must weigh the 8.3% appreciation of the

trade-weight euro since April against very good growth and unemployment data. In

updated Staff forecasts, the inflation outlook might take a tiny reduction but

only because of the currency move, not due to Eurozone economic weakness.

- The ECB QE programme needs adjustment for technical reasons, if nothing else

and the programme was already adjusted downwards from E80bln pcm to E60bln in

March 2017 and a further cut to E40bln is widely expected to be formally

announced in October. This may also be hinted at on Thursday. 

- How is this be communicated? Draghi could omit the existing reference to

possibly increasing the QE programme's "size" in his introductory statement i.e.

the programme is only getting smaller. Many see this as the most-likely option

but, this might then need to be re-inserted next year when the programme is much

smaller. A second way echoes Nowotny's recent downplaying of FX movements. Yet a

third is to say bluntly that a decision is likely in October once Staff have

concluded studies. 

- It's not an easy meeting and 2Y Germany reaches it at a lowly -0.735%.