Similarly to the Bank of England, as covered in this morning’s Sterling report, the European Central Bank are set to announce their latest interest rate decision later on this afternoon. As with the BoE the expectation is for interest rates to remain on hold after the ECB stated in June this year that they would be unlikely to consider raising rates until the summer of 2019.
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This Interest rate decision comes just a couple of weeks before the ECB are set to half their current bond buying scheme in October, before fully winding down all monthly asset purchases by the end of this year. With no change in rates expected I believe that today’s press conference with Mario Draghi, head of the ECB, will focus on the timing of the termination of their Quantitative Easing programme.
He is likely to face a lot of scrutiny on this topic from reporters and if there is any hesitation in his tone to commit to the December termination then we could see the Euro weaken slightly. It will also be interesting to see if he provides any clarity on the stance to raise rates in the summer of next year and if the path of rate rises looks different to that of the UK and US’s then we could see longer-term weakness for the single currency.
There are also fears within the Eurozone that the increased chances of a global trade war are weighing on economic growth in the bloc and this could be announced in today’s meeting, which is likely to impact on the single currency.
There are also trade balance figures released tomorrow morning which are forecast to slow a slight drop, which could also be attributed to trade tensions. If that’s the case then there could be a spike to take advantage of for Euro buyers.
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