Market movers today
Focus today will be on PMIs for the euro area, the UK and the US. In the euro area there are some rays of light, not least with the recent German ZEW figures, and we look for a further uptick to 47.1 in PMI manufacturing for January.
PMI will be particularly closely watched in the UK where very weak data lately has fuelled expectations of a rate cut from the Bank of England at the end of this month.
In the US PMI manufacturing has diverged from the US ISM manufacturing index as PMI has moved higher in recent months, whereas the ISM index has dived lower. Given the more positive manufacturing signals in China for some time now, we believe more in the PMI and expect a further rise this month.
The Corona virus is still going to get attention, as China has now put millions of people on lockdown in two cities at the epicentre of the virus outbreak that has killed 25 people and infected more than 800 so far. Yesterday the WHO declared it an emergency, though not yet an international concern.
Finally, over the weekend we have an important regional election in Italy in Emilia-Romagna, which looks set to result in a defeat for the PD-Five Star coalition in one of the left's traditional heartlands, which may prompt calls for the coalition to resign.
Selected market news
Yesterday's ECB meeting was uneventful in terms of new policy signals, as Christine Lagarde refrained from giving clues about the future of monetary policy, because data since the December meeting was broadly in line with expectations.
The highlight was the launch of the strategic review although the details were scarce. The ECB highlighted the following. (1) The review will encompass a quantitative formulation of price stability, a monetary policy toolkit, economic and monetary analyses and communication practices. (2) Other considerations, such as financial stability, employment and environmental sustainability, will also be part of the review. (3) The ECB expects to conclude the review by the end of 2020. (4) The review will be based on thorough analysis and open minds, engaging with all stakeholders.
As we expected, the ECB left its growth risk assessment as skewed on the downside, while acknowledging some stabilisation in euro area growth dynamics and less pronounced risks surrounding international trade since December.
Norges Bank (NB) left the sight deposit rate unchanged at 1.50% in a decision widely expected by both markets and analysts. NB clearly expects the policy rate to remain unchanged at least until the next 'main' meeting in March. This is in line with our expectations, but we still pencil in a rate hike in June 2020, even if the probability of this call materialising has fallen considerably in recent weeks and arguably is not much more than 50% at this stage.
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 trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD continues its downward trend for the fourth consecutive day, driven by a stronger US Dollar influenced by the hawkish market sentiment surrounding the Federal Reserve and expectations of prolonged higher interest rates.
GBP/USD: The first downside target is seen at the 1.2600–1.2605 zone
GBP/USD trades on a weaker note around 1.2620 during the early European session on Friday. The decline of Pound Sterling is backed by the growing speculation that the BoE will begin the rate-cut cycle this year.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.