ECB likely to focus upon ABS and TLTROs

• BoJ minutes provide few surprises

• Australian jobs data comes in largely positive

• BoE expected to remain steady

• ECB likely to focus upon ABS and TLTROs

European markets are expected to open lower today, following on from a somewhat dour Asian session overnight that saw all the major bourses move to the downside. The release of BoJ minutes was expected to put a somewhat dovish spin on affairs, yet with Kuroda already providing a lot of meat on the bone of Friday’s decision, there was little left to reveal in those minutes. Australian jobs data did provide the one boost overnight, however with the announcement of both BoE and ECB monetary policy later today, I see a lot of caution coming into investor sentiment. As such, futures point towards a lower open, with the FTSE100 -17, CAC -11 and DAX -29 points.

The release of minutes from the BoJ overnight was expected by many to provide yet another boost to the Nikkei strength and Yen weakness, as the provision of a yet more granular view to their dovish view was presented. However what we saw was the opposite, with markets instead taking the moment to pause in those moves and instead shrugging off what appears to be just a reiteration of what we already know. The BoJ remains geared towards hitting 2%, which will be reached at some point or another through continued stimulus measures, yet we already know this from Kuroda’s ‘whatever it takes’ speech earlier this week. The minutes also expressed their view that a weaker yen in beneficial for the Japanese economy. Again, this view has been known since the introduction of Shinzo Abe as the new leader. Thus, whilst the content of these minutes were actually very strong in their message, the existence of previous like of like comments means that markets took very little from them.

The Australian economy was boosted by a strong jobs report overnight which saw unemployment remain steady, alongside a very strong employment change figure. The unemployment rate has been a thorn in the side of the Australian economy over the past three years, which has seen it rise from sub 5% to the 6.2% seen today. With that in mind, the flatlining of this reading could be seen as a positive result and indicative of an end to the upward trend. In terms of the employment change, it is very difficult to gauge exactly what is good and bad because the figure is so volatile that almost every month of employment growth is followed by one where the figure falls. However, these numbers should be taken with more than a pinch of salt as the recent volatility in the Labour Force Survey alludes to, with the ABS recently changing the methodology behind the collation of data, leading to lower reliability and a much greater scepticism regarding how the data is collated.

The big news stories of the European session are likely to come out of the central banks, with both the BoE and ECB announcing their latest monetary policy decisions to much fanfare. However, for the most part, the BoE has become somewhat of a predictable affair, with rates likely to remain steady for some time yet given falling inflation and this week’s worsening PMI figures. The MPC usually only provides a statement alongside the announcement when something changes and given that this seems highly unlikely, I expect today’s meeting to be somewhat of a non-event for the markets.

In the ECB, there is a lot more activity for traders to grab hold of, with recent meetings seeing both the announcement and subsequent details surrounding the new ABS scheme. Recent noises coming from the Eurozone suggest that many central bankers are not happy with how Mario Draghi conveys his message, so it will be interesting to see if we see any change in tact. However, for the most part, I am sceptical about the possibility of any further policy measures being introduced for the next few months, instead expecting the ECB to focus upon the TLTRO issue in December and introduction of the ABS plan. Thus today is likely to take a similar form to last month, where Draghi further elaborates upon the setup of the programme and how he thinks it will help the current dire situation in the single currency region.