Market movers today
In the US, the FOMC meets today. This meeting is one of the small meetings (no updated projections and no press conference) and we do not expect any changes in monetary policy or any major changes in the statement .
In the euro area, the figures for Q1 GDP growth are due out . Throughout Q1, we observed strong activity indicators, with the PMIs and IFO climbing notably to levels not seen since 2010. Therefore, we estimate 0.4% quarterly growth for Q1.
This evening, we will also have the final TV debate between the two French presidential candidates Marine Le Pen and Emmanuel Macron. Although Macron is still leading with a 20pp margin in the polls, the impact of the TV debate should not be underestimated in shifting voting intentions in favour of Le Pen in case of a convincing performance today.
Note that we are due to get ADP employment for April in the US today, which should give us a firstimpression of the shape of the labour marketin April ahead of Friday’s jobs report .
In the US, ISM non-manufacturing index is also due for release today.
EIA crude inventory data is due to be released today. The market will be positioned for a drop following the API report yesterday, which was said to show a 4.2mb drop in crude stocks last week.
Selected market news
Risk sentimentremains on the positive side in financial markets with stock markets and commodity markets in general inching higher and the VIX index hovering around low levels ahead of the FOMC meeting tonight and the US jobs report on Friday – two events that will help shape market expectations about upcoming decisions on rates and the Federal Reserve balance sheet in the US.
Yesterday, the ECB’s Ewald Nowotny said that ‘at the (ECB) meeting in June, we will have to discuss the future strategy, the strategy for the beginning of 2018…itis clear that the (asset purchasing) program has been and is a success. But on the other hand, itis also clear thatit must not become a permanent facility… thatis t he challenge we face’, he added. ‘The longer such a program continues, the more one must think about its consequences’. Therefore, he added to the speculation about whether an ECB exit from the current stimulus is moving closer, although the market did notreact to the comments with EUR/USD continuing to trade close to the 1.09 level.
The American Petroleum Institute was said to report yesterday that US crude stocks fell 4.2mb last week – a large draw, albeit from a high level. The stock figures did not manage to turn the current bearish sentiment in the oil market . The price on Brent crude is currently trading around USD51/bbl. The combination of global crude stock level and oil price will be two decisive factors for OPEC in deciding on an extension of the current production cuts. The cartel is set to meet on 25 May to decide on this matter.
