The markets main focus last week was set on Europe and ECB president, Mario Draghi’s press conference. Draghi announced that there was steady economic recovery and ECB’s plan to not tighten any policies to protect the steady growth. Draghi’s dovish comments initially caused the Euro to fall. However, Draghi later speculated that the ECB may start to discuss reducing the QE in autumn, which caused the Euro to rally and reach a two-year high against the Greenback.
The International Monetary Fund have announced that the UK and US economies will expand slower than previously thought in 2017. The IMF have cut the growth forecast from the UK from 2%, down to 1.7% for 2017, due to ‘weaker-than-expected activity.’ The US outlook has also been reduced from 2.3% to 2.1%. The growth forecasts for some Eurozone countries were revised, including the four biggest; Germany, France, Italy and Spain. The global economic prediction has remained unchanged at 3.5% for 2017 and 3.6% for 2018.
There is a busy start to the week, with several flash Services and Manufacturing PMIs released from both the US and Eurozone. The first to be released are the individual figures from two of the EU’s largest economies; Germany and France, followed by the Service and Manufacturing PMIs from the whole of the Eurozone. The Services PMI will be closely watched as it fell for the first time this year last month and as it makes up the highest percentage of the overall GDP. Across the pond, the US will also be releasing their flash services and manufacturing PMIs.
A quiet day is expected on Tuesday, with limited high tier data releases. Germany will release their Ifo Business Climate report and the monthly CB Consumer Confidence report will be released from the US later in the afternoon.
Wednesday is arguably the most important day this week, with the release of the rate decision from the Fed and the prelim GDP figure from the UK. The Fed are expected to keep rates on hold, so attention turns to the Fed’s rhetoric. Meanwhile, the Prelim GDP figure from the UK is expected to show a small growth from last quarter to 0.3%.
Thursday sees two pieces of key US data released. Firstly, markets will gain an insight into the US labour market as the weekly jobless claims are released. Simultaneously, US Core Durable Goods hit the wires, forecast to improve on last month’s better than expected 0.3% to a slightly better 0.4%.
Friday will be another busy day, with data releases from the Eurozone and US. The day will start with the release of prelim and flash CPIs from France, Germany and Spain, with Spain also releasing their flash GDP. Across the pond, the US will be releasing their advance GDP figure, expected to grow to 2.5%. This is the first reading of the GDP for the second quarter so the markets will be watching closely. Also released from the US is the Employment Cost Index, revised UoM Consumer Sentiment and FOMC member Kashkari will be speaking.