The ECB economics staff comes up with new forecasts in March
|Outlook:
In the US, we get the usual Thursday jobless claims, the Markit PMI, and the leading index. But Draghi is the main attraction. He can hardly avoid noting the slumping data that points to the necessity of naming a worsening "balance of risks." Draghi can't avoid sounding somewhat dovish, but at the same time reluctant to draw conclusions until the ECB economics staff comes up with new forecasts in March and the policy board actually talks about alternative paths.
"We did not discuss...." X or Y is a tricky way for Draghi to escape giving a hard answer. He is representing the policy board, not his own opinions. Fair, but an escape hatch that annoys the reporters. Weall know Draghi must come off as worried about conditions and possibly open to the idea of postponement, but we also know we are not getting any hard news today because the board didn't discuss alternative pathways. We are going to get the usual pablum about needing more data.
We should probably consider that all this is already priced in. There is a good chance we get a "sell on the rumor, buy on the news" episode. We know the Fed is on hold but we are not yet certain the ECB is on hold, too. Does Japan show a model? Expectations are forming that more QE might be in store. But Draghi's take last week was "slowdown, not recession." We expect only the slightest whiff of retreat. And Gittler at ACLS has one of his splendid charts showing that financial conditions are not dire.
And see the euro on the weekly chart. A weekly chart is hardly tradeable, but notice we have a long-term recovery off the crash of 2015. Okay, we might get a dip to support at the channel bottom (1.0989), but this is corrective move, not a primary new trend. Wishful thinking?
This is an excerpt from “The Rockefeller Morning Briefing,” which is far larger (about 10 pages). The Briefing has been published every day for over 25 years and represents experienced analysis and insight. The report offers deep background and is not intended to guide FX trading. Rockefeller produces other reports (in spot and futures) for trading purposes.
To get a free trial, please write to ber@rts-forex.com and you will be added to the mailing list..
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.