Heavy week for economic data and events, volatility guaranteed…
The following 5 days of trading have a number of key data releases/events to keep a close eye on. However, the number 1 topic on everyone’s mind is the European Central Bank meeting and how far the central bank will go to stimulate growth in the Eurozone region.
The announcement will take place on Thursday and it’s almost guaranteed the ECB will lower the cash interest rate by something in the region of 10 – 20 basis points. The main question is whether the bank recommence asset purchases. These could come in the form of government debt, corporate bonds or even stocks. No doubt, the efficacy of new purchases will be limited, mainly due to the previous programme which racked up a whopping €4 trillion bill.
The euro will likely respond dependent upon how far the bank decide to go in respect to QE. If there’s no QE, given the recent weakness in the euro (helping the pound move from €1.0650 – €1.1150 in just over a month), then we could see a sharp rebound in the single currency’s fortunes. If the ECB ready the bazooka pt. II of stimulus packages then we can be sure the euro will weaken. However, please bear in mind, Draghi has had a tough time convincing the governing council to reduce rates alone, hence the chance he’ll have consensus for another huge QE package is small.
Elsewhere, Brexit is on the agenda as Boris tries for a snap election once again. Additionally, UK employment data plus industrial/manufacturing data will all feature this week. US retail sales will also feature on Friday as well as Chinese data too.
Written by Viv Savani. 9:59am, September 9th 2019
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8:39am, January 8th 2020
Parliament recommences, market still focused on geopolitical tensions…