German IFO Seen Adding To Encouraging Euro Surveys

A negative lead from the US combined with mixed moves in Asia overnight appears to be weighing on European futures ahead of the open. The lack of many significant economic data or news flow won’t be helping matters and may well provide the backdrop for consolidation in the markets this week.

We’ve had a lot to take in over the last few weeks with the Federal Reserve’s view on the economic outlook appearing to soften and the European Central Bank beginning its quantitative easing (QE) program taking most of the headlines. The first quarter earnings season is next and people are not optimistic as the strength of the dollar in particular is expected to be a major drag on earnings. This may provide the perfect opportunity for a correction in the markets although that could depend on whether a poor earnings season and strong dollar also softens the Fed’s view on the timing of the first rate hike.

It would appear that Greece is running out of time to draw up an appropriate detailed list of reforms that will get approval from its creditors and allow the country to stay afloat for a few more months. The latest reports suggest that the country will run out of money on 20 April which doesn’t bode well for Greek Prime Minister Alexis Tsipras who has spent the last couple of months since his election unsuccessfully negotiating a better deal. So far it’s fair to say he’s achieved very little and with time running out, he may be forced to accept a deal which he would have deemed unacceptable only a couple of months ago.

Some encouraging economic data from the eurozone recently has been welcome news as the weak euro combined with lower oil prices and ECB stimulus appears to have shocked the region to life. Yesterday’s PMI readings were quite encouraging and today’s German IFO business climate survey is expected to support those reports. A rise to 107.3 is expected, the highest since June last year..

Later on we’ll get durable goods orders from the US for February as well as the latest crude oil inventories data, which is expected to show another build of five million barrels following last week’s surprise 9.6 million rise.

The FTSE is expected to open 21 points lower, the CAC 24 points lower and the DAX 48 points lower.

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam