EUR Outlook

From the FXWW Chatroom – Will the ECB ease its monetary policy again? And if so when? A number of central banker’s speeches and the euro zone PMI are likely to provide some insight today. In the end it all centres on the question to what extent the euro zone economies have been affected 
by the volatility on the global financial markets and the weak demand in particular from 
the Emerging Markets. Of course the euro plays a key role in this context. After all the depreciation 
of the euro into Q1 2015 meant that so far the euro zone economy has stood up 
quite well despite weak global demand. However, in the absence of further depreciation this 
effect will not be sustainable, a development that in view of the current risks in the Emerging 
Markets is threatening to put pressure on inflation. 
At the last press conference ECB President Mario Draghi had pointed out exactly these risks 
in a surprisingly outspoken manner. The fact that these are increasingly materialising should 
be reflected in falling PMIs today. Our economists expect a result below consensus (51.5 vs. 
52 according to consensus). Weak euro zone data increases the likelihood that the ECB 
might have to adjust its economic outlook to the downside as early as December. We assume 
that a downward correction will be accompanied by a further easing of monetary policy. 
Speculation of this nature is therefore likely to put pressure on EUR today. In particular if 
Draghi once again underlines the ECB’s willingness to act again at today’s hearing in front of 
the EU parliament. [Commerzbank] 

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