Læs hele “Ugens der kommer” fra Scotia Bank:
Europe — ECB Walking On A Wire
German Finance Minister Wolfgang Schaeuble didn’t mince words when he remarked recently that “The mandate for the European Central Bank is limited, and of course it is excluded that there will be financing of national budgets. That would be a violation of the treaty and therefore we have to respect the rules.” Those words will no doubt serve as a fresh reminder of the difficult constraints that face the ECB as it meets on Thursday. No policy action is expected, but the focus will be upon President Draghi’s press conference at 8:30amET that day. ECB sentiment is also being influenced by at least a temporary respite in the trend toward falling inflation readings given that the October reading ticked higher to 0.4% from 0.3% the prior month. Nevertheless, core Eurozone inflation slipped to 0.7% y/y and is at its lowest since May and so there is a definite sense that downside risks to Eurozone inflation readings have not yet abated.
Having said that, the balance of the week’s releases could well paint a more encouraging picture by way of bottoming growth prospects in the Eurozone. Key will be German data on Thursday and Friday. After steep declines in factory orders, industrial production, and exports during August, consensus believes that the tide will turn in the opposite direction via sharp gains in all three measures during September. That would at least mitigate concerns about an accelerating pace of deterioration even though the trend is likely to remain pointed lower.
Not to be outdone by the folks across the Channel, the UK will also face mild market risk. No change in Bank of England policy is expected so the focus will be upon the tone of discussion when the minutes to the meeting get released on November 19th. Deputy Governor Jon Cunliffe summed it up well when he remarked “The softening in the pay and inflation data, together with the weaker external environment, for me implies that we can afford to maintain the current degree of monetary stimulus for a longer period than previously thought.” Fellow Deputy Governor Nemat Shafik said likewise: “We would need to see more of the data pointing in the same direction in terms of price pressures — particularly in terms of wages and unit labour costs.” Monday’s manufacturing PMI, Thursday’s industrial production and monthly GDP, and Friday’s trade figures round out the risks. Secondary European releases will include revisions to PMIs, the EC add-up for retail sales, and French industrial production.
