Focus remains on Draghi's press conference

Thursday, September 03, 2015

European equity markets rebounded strongly this morning as the DAX, CAC, IBEX and London equity benchmark indices rallied between 1.2% and 1.5% in early trade. The EUR hovered around 1.12 against the USD, ahead of ECB announcement. We don’t expect any big surprises from the European Central Bank today, as recent momentum is that interest rates will be left on hold. However, all eyes are on President Mario Draghi's press conference. It will be interesting to see whether there will by any rumours/hints regarding a possible extension of the current QE programme with possible lower inflation forecasts for the coming months.     

EURUSD over 2 years

EURUSD Curncy (EUR-USD X-RATE)   2015-09-03 08-55-48

                              

The US Fed Beige Book reported yesterday that economic activity is expanding while growth is expected to continue for the rest of 2015. The pace of employment growth has been solid despite some further vulnerability in the oil sector. However, there were some concerns over the global macroeconomic outlook and the US dollar strength which currently brings further uncertainty regarding a possible increase of US interest rates later this month. There were mixed views, while the St Louis Federal Reserve Research Director called for the Fed to increase rates in September following the recent rise in inflation excluding oil prices. US equity markets rallied strongly into the close. The Dow Jones added nearly 300 points yesterday and climbed 1.82% towards 16,350, while the NASDAQ rallied 2.46% to retest 4,750. The main focus will turn to US non-farm payroll data tomorrow, which will set the tone for the following trading sessions. 

Asian equity markets were mixed overnight. In Japan, the Nikkei index rebounded and climbed higher nearly 0.5% towards 18,200, showing signs of upside momentum. 

Market participants will be keeping an eye on the release of the Markit Sevices PMI data from the UK and Eurozone as well as Eurozone’s retail sales figures. In the US, the release of the weekly jobless claims, ISM non-manufacturing PMI and trade balance for July will draw investors’ attention.

USD index

DXY Curncy (DOLLAR INDEX SPOT)   2015-09-03 08-57-01

  

Events for today:

0855

DE

Aug

Markit Services PMI

0900

EZ

Aug

Markit Services PMI

0930

UK

Aug

Markit/CIPS Services PMI

1000

EZ

Jul

Retail Sales

1230

US

Aug

Layoffs

1245

EZ

Sep

ECB Rate

1330

US

Jul

Trade Balance

1330

US

w/e

Jobless Claims

1445

US

Aug

Markit Composite PMI

1500

US

Aug

ISM Non-Manufacturing

1530

US

w/e

EIA Nat Gas

 

All times UK Local Time

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