HomeContributorsFundamental AnalysisFocus May Now Turn To The ECB

Focus May Now Turn To The ECB

Market movers today

Markets will continue to digest the FOMC meeting yesterday,

In the Scandi markets, today’s key event is the Norges Bank meeting, where we share the consensus view that Norges Bank will not touch interest rates. The minutes from the Riksbank’s September meeting are also due out (see page 2).

In the euro area, consumer confidence data for September is due out . Wage growth has started to pick up in Q2, but as inflation has also increased since 2016, real wage growth remains low and could act as a drag on consumer confidence. We expect a small decrease in confidence to -1.6 in September.

In the US, the Fed Philly index for September is due to be released, which we expect to fall somewhat given the extremely large gap between ISM manufacturing and Markit PMI manufacturing. The numbers may be somewhat affected by the recent hurricanes although it remains our base case that any impact should be short -lived.

ECB president Mario Draghi is also due to speak in Frankfurt this afternoon.

Selected market news

The FOMC statement yesterday came out on the hawkish side compared to market pricing with the Fed still projecting another hike this year and three more hikes next year. It compared with a market that was pricing in less than two hikes by the end of 2018 ahead of the meeting. The message from the Fed pushed bond yields up and sent EUR/USD below 1.19. Equity markets initially sold off but recouped the losses and finished broadly flat . Asian markets are mostly higher but the S&P future is treading water in overnight trading. The Fed’s projection is broadly in line with our own expectations as we see a continually tightening labour market as keeping the Fed on the path of very gradual rate hikes.

Focus may now turn to the ECB with a long list of speeches in coming days from ECB members, see Bloomberg. The markets will be looking for clues on what to expect at the important 26 October meeting, when the ECB has stated it will give more clear signals on its exit strategy.

Otherwise, the next thing up is the German election on Sunday, although German Chancellor Angela Merkel is widely expected to win. While she has lost some ground recently, the polls still point very much to another term for her.

The Bank of Japan kept monetary policy unchanged this morning but a dovish new member dissented the decision. However, this was widely expected. The JPY did not move on the announcement.

Danske Bank
Danske Bankhttp://www.danskebank.com/danskeresearch
This publication has been prepared by Danske Markets for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Markets´ research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Markets is a division of Danske Bank A/S, which is regulated by FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright (©) Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

Featured Analysis

Learn Forex Trading