Economic data coming up in the European session

Author: Justin Low | Category: News

All eyes are on the ECB today

ECB
Good day, everyone! Hope you're all doing well as we look to get things going in the session ahead. Markets are a bit more upbeat as Trump says that he will delay tariffs against China for about two weeks earlier.

As such, risk trades are looking buoyed with the aussie and kiwi stronger while the yen is on the back foot to start the day.

There will be a few minor data points to move things along in the European morning but today it's all about the ECB decision. Will Draghi & co. deliver a significant stimulus package to appease markets? Or will they disappoint? Only time will tell.

0600 GMT - Germany August final CPI figures
The preliminary report can be found here. As these are final readings, they aren't expected to produce much - if any reaction - unless they deviate substantially from initial estimates.

0630 GMT - Switzerland August producer and import prices
Prior release can be found here. A proxy for inflationary pressures in the Swiss economy. Not a major release by any means.

0645 GMT - France August final CPI figures
The preliminary report can be found here. As these are final readings, they aren't expected to produce much - if any reaction - unless they deviate substantially from initial estimates.

0900 GMT - Eurozone July industrial production data
Prior release can be found here. Factory activity is expected to remain sluggish and that comes as no surprise, so expect the data here to reflect said sentiment to begin Q3.

1100 GMT - CBRT announces its latest monetary policy decision
Prior decision (July) can be found here. The Erdogan rate cuts look set to continue today with expectation for a 250-300 bps cut to follow the whopping 425 bps rate cut in July. The consensus for rate cuts this time around is more spread out though with some even seeing the possibility of a 400 bps rate cut. The falling trend in inflation recently is a supportive factor here and should allow further room to explore to the downside. The lira has been largely steady and there may a bit of a knee-jerk reaction to the announcement here but I reckon the currency may take it in stride again, similar to what we saw in July.

1145 GMT - ECB announces its latest monetary policy decision
Prior decision (July) can be found here. I think the borderline base expectations is for a 10 bps rate cut, rate tiering system, change in the forward guidance, and roughly a restart of QE around the realms of €30 billion per month. Either way, it's not going to be your typical straightforward central bank decision and the details will matter much more in this case. The risks are skewed towards both sides in my view, so it will boil down to how the market perceives the stimulus package in the end. There could be a relief rally if the ECB falls short of delivering but overall disappointment could see sellers return shortly.

1230 GMT - ECB president Mario Draghi press conference
Draghi's messaging following the decision later will be crucial for sentiment. The ECB is expected to throw the kitchen sink and possibly more down the road, so we'll have to see how he sets up markets for that. They may put a more positive (in this case dovish) spin on how robust their stimulus package may be but at the end of the day, it's plain for all to see. If he starts alluding to the need for more fiscal help from governments and limitations on monetary policy, expect that to be early signs that the ECB is throwing in the towel and that may spell danger for the euro.

That's all for the session ahead. I wish you all the best of days to come and good luck with your trading!
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