FX Headlines: Euro Eyes ECB Press Conference; Sterling Looks to Next PMI
- ECB press conference to stoke more volatility than the rate announcement.
- Soft PMI Manufacturing could signal near-term pullback in UK growth momentum; PMI Construction today.
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EURO-ZONE ECONOMIC CALENDAR
The recent retracement in individual Euro-Zone countries’ PMI figures points to a “top” in growth having been reached in the near-term, as it appears that a lack of credit growth in the Euro-Zone has become a drag. This was evident in the recent inflation data, which saw the CPI hit a post-crisis low (tied lowest since February 2011).
This concern dates back to early-August when ECB President Draghi first noted the decline in Euro-Zone excess reserves. As noted several weeks ago, we believe there have been indications that another LTRO may be in the works, which would be EUR-negative similar to December 2011 and February 2012. While we do not expect an announcement for another LTRO today, we expect the aforementioned conditions to be heavily emphasized at the meeting, which should prove EUR-negative nonetheless.
UK ECONOMIC CALENDAR
A soft PMI Manufacturing print could signal that a near-term top in UK growth as been reached, as evidence mounts across Europe that the midyear rebound may be cooling. Recently higher interest rates have hit the UK as the Bank of England has backed away from its perceived dovish policy stance that was expected upon Governor Mark Carney’s arrival; and with wage growth dampened, higher rates are likely to hurt interest rate sensitive sectors. A hold near the prior level is expected.
SWISS ECONOMIC CALENDAR
There are no data due for the Swiss Franc on Tuesday, October 1.
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--- Written by Christopher Vecchio, Currency Analyst
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