Weekly Comment - Another ECB headache for the euro
- Marios Hadjikyriacos
- The main event will be the ECB meeting, where policymakers will probably signal that they are serious about hitting their new inflation target. This means a commitment to negative rates for a long time, which is bad news for the EUR, as it would highlight the divergence with other central banks that are moving towards higher rates.
- There’s also a barrage of PMI business surveys out of the Eurozone, the UK, and the US.
- In Australia, the minutes of the latest RBA meeting could show the central bank doesn’t intend to join the ‘rate hike club’ anytime soon, which could keep AUD under pressure.
- In the commodity arena, gold prices have extended their recovery, drawing strength from the persistent decline in real yields. However, oil prices are struggling following the compromise deal within OPEC that will bring more supply back online.
- Finally, the earnings season will kick into high gear with household names like Netflix, Intel, Coca Cola, and Johnson & Johnson releasing their quarterly results, which should keep stock markets entertained.
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