HomeContributorsFundamental AnalysisWeekly Focus: No Changes to ECB's Forward Guidance

Weekly Focus: No Changes to ECB’s Forward Guidance

Market movers ahead

  • We do not expect the ECB to change its forward guidance when it meets on Thursday next week but believe it will wait until the March meeting.
  • In Norway, we do not expect new signals from Norges Bank but we think the likelihood of a rate hike in December has increased since the last meeting.
  • The Bank of Japan meeting ends Tuesday morning and we expect no changes to monetary policy.
  • Otherwise, we are due to get preliminary PMIs for January for the euro area and the US. Next week also sees the first estimate of GDP growth in the US and UK in Q4.

Global macro and market themes

  • The 5Y point is the pivotal point on the EUR curve. This is right after the textbook and the normal pattern we see when monetary policy is about to change in either direction.
  • While the 2Y5Y curve has steepened, the 5Y10Y curve has flattened. Also, the 10Y30Y curve has flattened, as long rates are already trading close to the ‘neutral rate’ in the eurozone – a curve dynamic close to the curve dynamics seen in the US since 2013.
  • We expect to see an extension of the recent flattening of the EUR curve in 2018.

Full Report in PDF

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

Using a Multi-Timeframe Approach

The EUR/USD