The ECB will announce its latest monetary policy decision today

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

The ECB 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 UK 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 US, 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 US 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 UK, this sector is so large it is capable of single-handedly supporting the economy, so the PMI reading should not be overlooked.