ECB Press Conference and PMI Data Key on Thursday

European indices are expected to open higher again on Thursday following a positive lead from the U.S. on Wednesday and some relative calm in Asia as Chinese markets close in observance of Victory Day.

The European Central Bank will announce its latest monetary policy decision today and while no change is expected on this occasion – to either interest rates or its €60 billion per month quantitative easing program – there has been growing speculation that it will look to expand the latter.

This would come in response to the continued downward pressure on euro area inflation levels and the additional deflationary pressures coming from external central bank measures. The most notable of these is the People’s Bank of China which has been very active recently including a cut to interest rates and the reserve requirement ratio last week.

While the ECB may not wish to address this immediately and risk becoming involved in a currency war, it is something that is likely to be discussed and the media will surely probe for details on what was said.

There is a lot of economic data being released today although it should be noted that many of these are revisions to previously released data. Eurozone and U.K. services PMI data will be released this morning and in most cases they are expected to be unrevised. The releases will be scattered throughout the morning will could keep the euro on its toes. Retail sales figures will follow, which should show a 2% rise from a year earlier.

Later on this afternoon we’ll get more data from the U.S., although I feel that today’s may not quite have the same influence on the Fed’s decision making as some we’ve had or are due this week. The result may be that the market reaction is more muted for many of these. The services and ISM non-manufacturing PMIs should be of interest given the importance of the services sector to the U.S. economy. If confidence remains high here, it would suggest that economic growth in the country is likely to remain strong. As we’ve seen in the U.K., this sector is so large it is capable of single-handedly supporting the economy, so the PMI reading should not be overlooked.

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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
Craig Erlam

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