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How markets will react to ECB and US non farm payrolls
For many traders a big week ahead, with ECB decisions and Non Farm Payroll data on the agenda amid hopes that markets may get moving. Saxo Bank's Head of Macro Strategy Mads Koefoed says "Markets have been in a holding pattern for the last couple of weeks given the geo-political risks and the lack of important data.".
Thursday's focus will be on the ECB but with Eurozone inflation slowing to 0.8 percen,t the committee's first meeting of the month may use the breathing space and leave rates unchanged. Investors will want to hear the comments from ECB President Mario Draghi when he takes question from the media after the bank's announcements, looking for clues about future action. It's a case of if not when.
On Friday the latest non farm payroll data could signal more shaky numbers for the US; with all the implications for the USD. Mads Koefoed has also been analysing the latest US GDP figures: which have been revised down by 0.8 percentage points (pp) to 2.4% QoQ annualised in Q4. The drivers were primarily lower private consumption (2.6% vs. 3.3% initially) and a higher GDP deflator (1.6% vs. 1.3% initially).
Private consumption is now estimated to have contributed 1.7pp in Q4 while government consumption contributed -1pp. Gross investment added 0.7pp of which inventories accounted for 0.1pp. Net exports contributed 1pp due to an increase in exports of 9.4% QoQ annualized and an increase in imports of 1.5%.
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