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Eurozone figures will show if more stimulus is needed

Monday, Aug 29 2016

After five weeks of silence, the European Central Bank president is leaving it largely to a raft of economic data to fine-tune policy expectations ahead of the Governing Council’s next meeting on Sept. 8. Reports covering inflation to business confidence and unemployment in the coming days may signal whether more stimulus is needed to sustain the recovery and revive price growth amid potential fallout from Britain’s vote to leave the European Union.

Momentum in the 19-nation euro area has so far shown few signs of losing pace, and economists at both JPMorgan Chase & Co and Danske Bank A/S pushed back projections for further easing. But executives in Germany, the region’s largest economy, are beginning to wake up to the Brexit shock, suggesting that more severe consequences may still be ahead.

 

“I don’t think there is anything in the data calendar that is so decisive that it will either change the market or the ECB or both,” said Peter Schaffrik, head of European rates strategy at Royal Bank of Canada. “Inflation is going to go up slightly but it’s not going to go up fast enough to make them think ‘we don’t need to do anything.”’

 

Euro is currently being traded around 1.1180 level. Pair is likely to find support around 1.1150 handle and resistance above 1.220 area.

 

Source: Bloomberg.com

More in this category: « HIA reports 9.7% decline in new home sales UK economy wasn't hurt by Brexit, according to recent reports »

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