Market movers today
The combination of ECB’s QE announcement, a weaker euro and low oil prices should lift investor confidence and we expect the Euro Area Sentix Investor survey for February to surprise on the upside and increase to 4.0 in February from 0.9.
The Fed will release the January LMCI which should get a boost from Friday’s strong US labour market report (see US: very strong employment report, 6 February 2015).
German Chancellor Angela Merkel is to meet President Barack Obama in Washington today as Merkel will try to secure a diplomatic solution to the escalating Ukraine crisis. The visit comes after the latest round of talks between France, Germany, Ukraine and Russia failed to result in a peace accord at the weekend.
Monetary policy in Denmark and Danmarks Nationalbank will likely be in the spotlight today as downward pressure on EUR/DKK prevails. For more on Scandi markets see page 2.
Selected market news
Since lowering the key policy rate for the fourth time in three weeks on Thursday, governor of Danmarks Nationalbank (DN), Lars Rohde, has toured several domestic and international media departing from the DN norm of not commenting on monetary policy. The message from Rohde has been clear, DN stands committed to maintain the fixed exchange rate policy and has unlimited ammunition to do so. In our view, DN will outlast the present DKK appreciation pressure, albeit it will likely undertake additional FX intervention purchases to keep pace with ECB bond purchases and further restore credibility in the peg. A lower key policy rate or more controversial instruments, such as bond purchases, may also come into play.
Another 83 were slashed of the US oil rig count last week, leaving it at the lowest level since December 2011. The steep decline in the US oil rig count over the past couple of months signals that consolidation on the supply side in the oil market is under way. It has supported a recovery of the price for Brent crude to around USD58/bbl and more consolidation in combination with rising demand should lift the oil price further over the course of the year.
Chinese foreign trade data published this weekend disappointed, highlighting weak domestic demand. Last week the People’s Bank of China cut the reserve requirement (see China: PBoC cuts reserve requirement, but aggressive easing unlikely, 4 February 2015), which should support domestic demand going forward.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.