We expect the ECB to deliver

Market Movers ahead

• European inflation is already far below the ECB’s target and the March figures will likely show a new low of 0.5%. That said, the low level of inflation is partly due to a technicality related to Easter, so the ECB may refrain from acting. 

• Nevertheless, we expect that the ECB will ease monetary policy at its meeting on Thursday given the current level of inflation. The decision will be tight, though, as the economy is recovering. 

• In the US, all eyes will be on non-farm payrolls, which delivered a positive surprise in February. We expect that 195,000 new jobs were created between February and March.

• We expect the ISM to rise slightly in March – the US economy still looks reasonably strong from a cyclical perspective. 

• China’s NBS PMI is expected to drop below the magical 50 mark, falling to its lowest level since August 2012. China’s economy still appears fragile. 
  

• Foreign currency reserve figures for Denmark will again place focus on the timing of unilateral Danish rate hikes.

Global macro and market themes

• Emerging market assets had a strong week despite the Crimean crisis and weak Chinese data. Markets are banking on stimuli and a near-term turnaround in China. 

• Yields continue to fall in southern Europe, with 10-year Portuguese rates dropping
  below 4% – their lowest level since 2009. 

• US figures show some improvement after the harsh winter weather depressed activity.
  Growth looks set to gradually pick up again from here. 

• Euro-activity continues to rise – highest consumer confidence in six years. 

Focus

• Euro area deflation monitor. All countries are at zero or below in our deflation index for the euro area.