Today is the first Thursday of the month and as ever this will see the ECB rate decision and more importantly for the markets, Mario Draghi’s Press Conference. Rates aren’t expected to change from 0.05% but what the markets will be looking for is Draghi’s views on whether the purchase of asset backed securities and long term refinancing operation have been successful. Clue; so far they haven’t been.
Focus looks like being switched to December’s auction and so we may witness another couple of months of waiting around and I certainly would not expect quantitative easing to be introduced. Poor Draghi also has more worries as Germany which was holding the Eurozone up somewhat has released poor figures in the last few weeks, possibly showing that the economy is starting to stagnate somewhat. Coupled with underwhelming Eurozone inflation data and manufacturing and industrial production slowing, things aren't looking too rosy.
In the UK, we have seen a couple of MPC members give interviews and dampen expectations of an immediate rate hike. Inflation is still the key and stronger Sterling has certainly altered the inflation reading.
After a sustained period of weakness the Australian and New Zealand Dollars both recovered yesterday after Chinese policy makers eased property restrictions marking a reversal of a 4 year tightening campaign due to the possibility that 2014 economic growth will not achieve the Governments targets. Australian building permits also increased more than expected and the trade deficit narrowed.
From the UK, we have PMI construction data. From the US, jobless claims and factory order. But the main story is out of the Eurozone and the rate decision and press conference.
Posted in Daily Market News on Oct 2 2014
Inflation in the Eurozone continues to drop and it could well be a slow march to deflation. Although inflation figures released yesterday showed a minimum decline from 0.4% to 0.3% it is now almost 2 years since the Eurozone level was at 2.0% which is the optimal level for stability...VIEW FULL ARTICLE
Posted in Daily Market News on Oct 1 2014 by