General

Week Ahead: Crunch time for the ECB

George Walker, Thursday, 14 May 2020

SAL-5673_WA-ECB_blog

It’s crunch time for the ECB as the long-anticipated decision on the eurozone’s monetary policy awaits.  Eyes will be firmly glued on Wednesday's meeting and subsequent Interest Rate Decision announcement - is it possible for the central bank to appease everyone in the eurozone? Surely not, so there could be some fallout to come. Elsewhere, there’s jobs data from the US and UK, Service and Manufacturing PMI data from the US and a handful of corporate earnings still to come. Here’s what to watch out for this week.

Busy start to the week

Japan will be getting the macro data under way in the very early hours of Monday morning with the release of preliminary Gross Domestic Product figures. Like all economies currently gripped by the coronavirus pandemic, Japanese GDP could have taken a hit and investors/traders of the JPY will be keen to see the extent of the damage.

UK employment data from the UK hits the wires just prior to the European markets open on Tuesday. The lockdown of the UK economy has seen drastic measures imposed by the UK government in order to try and protect jobs and ensure a healthy employment market. However, as restriction measures are eased the overall impact is likely to have had a dramatic effect. Average hourly earnings as well as the ILO Unemployment Rate could cause volatility in GBP as a result.

Wednesday will be the busiest day of the week on the macro front and could throw up some events which traders will want to be involved in. First up there is an interest rate announcement from the People’s Bank of China in the early hours which could influence trading overnight and set the tone for the open of the European markets. As the sun rises in Europe, Consumer Price Index inflation data out of the UK could see GBP set for some further volatility early doors and eurozone CPI figures are released shortly after.

QE only choice for ECB?

But the trading event of the week will potentially be the Interest Rate Decision from the European Central Bank and following Policy statement and Press Conference. European economies have been amongst the worst affected by the coronavirus and have forced the Central Bank to take measures to support the eurozone. The dilemma they face is their limited options as interest rates are already at rock bottom, so Quantitative Easing (QE) has so far been their tool of choice.

Another potential headache for the bank is that different countries in the eurozone have been affected at various levels with many desperate to reignite the tourism industry as we enter the summer months. Prior to the pandemic taking hold, the eurozone was already on the brink of a recession and for obvious reasons, these fears could now materialise. The press conference at 13:30 BST (Wednesday) is where traders and investors will be focused to see what the plans are going forward to limit the damage to the economy and attempt to get back on the right track.

US GDP in focus

Consumer Price Index data is out from Canada ahead of the US market open and the evening rounds off with the minutes from the latest Federal Open Market Committee in the US. Having heard already from the Fed Chair Jerome Powell, it is unlikely that we will see any surprises during the release of the minutes, but it will be worth monitoring just in case.

Thursday will be focused on the US with the increasingly volatile initial and continuing jobless claims followed by preliminary Services and Manufacturing PMI. Both make up GDP so, although preliminary, could be a gauge of the health of the US economy.

There are a few points of interest on the final trading day of the week as overnight we get Consumer Price Index data out of Japan and post the European markets opening, we continue to see the preliminary Manufacturing and Services PMI from Germany and the eurozone.

There are also quite a few large household company names reporting both from the UK and the US over the coming week including Walmart, Home Depot, Marks & Spencer, Target, Tate & Lyle, Burberry, United Utilities, Alibaba and more. Corporate results are often released while markets are closed and can subsequently see large gaps on the open both positive and negative so investors will need to be mindful when these results are due to be released.

All times indicated are BST.


ECONOMIC CALENDAR (all times are BST)

Monday, 18 May

00:50 JPY Gross Domestic Product Preliminary 
00:50 JPY Gross Domestic Product Annualised Preliminary
05:30 JPY Tertiary Industry Index
15:00 USD NAHB Housing Market Index
23:45 NZD Producer Price Index - Input
23:45 NZD Producer Price Index - Output

UK Company Announcements:

Centamin

US Company Announcements:

Pinduoduo Inc
Baidu Inc

Tuesday, 19 May

02:30 AUD RBA Meeting Minutes
05:30 JPY Industrial Production
07:00 GBP ILO Unemployment Rate
07:00 GBP Claimant Count Rate
07:00 GBP Claimant Count Change
07:00 GBP Average Earnings Including Bonus
07:00 GBP Average Earnings Excluding Bonus
08:00 EUR EcoFin Meeting
10:00 EUR ZEW Survey – Economic Sentiment
10:00 EUR Construction Output
10:00 GER ZEW Survey – Current Situation
10:00 GER ZEW Survey – Economic Sentiment
13:30 USD Building Permits
13:30 USD Housing Starts
21:30 USD API Weekly Crude Oil Stock

UK Company Announcements:

Imperial Brands
Renew Holdings
Topps tiles

US Company Announcements:

Walmart Inc
Home Depot Inc
NetEase Inc

Wednesday, 20 May

01:30 AUD Westpac Leading Index
02:30 CNY PBoC Interest Rate Decision
07:00 GBP Consumer Price Index
07:00 GBP Core Consumer Price Index
07:00 GBP Producer Price Index – Input
07:00 GBP Producer Price Index – Output
07:00 GBP PPI Core Output
07:00 GBP Retail Price Index
08:00 EUR Non-Monetary Policy ECB Meeting
08:00 EUR Current Account
08:00 EUR Consumer Price Index
08:00 EUR Consumer Price Index – Core
11:00 GBP CBI Industrial Trends Survey – Orders
12:45 EUR ECB Interest Rate Decision
12:45 EUR ECB Deposit Rate Decision
13:30 EUR ECB Monetary Policy Statement and Press Conference
13:30 CAD Consumer Price Index
13:30 CAD BoC Consumer Price Index Core
15:00 EUR Consumer Confidence
15:30 USD EIA Crude Oil stocks Change
19:00 USD FOMC Minutes

UK Company Announcements:

Experian

Marks & Spencer
Severn Trent
Compass Group

US Company Announcements:

Lowe’s Companies Inc
Target Corporation

Thursday, 21 May

00:00 AUD Commonwealth Bank Services PMI Preliminary
00:00 AUD Commonwealth Bank Manufacturing PMI Preliminary
00:00 AUD Commonwealth Bank Composite PMI Preliminary
00:50 JPY Merchandise Trade Balance
00:50 JPY Imports
00:50 JPY Exports
09:30 GBP Markit Manufacturing PMI Preliminary
09:30 GBP Markit Services PMI Preliminary
13:30 USD Initial Jobless Claims
13:30 USD Continuing Jobless Claims
13:30 USD Philadelphia Fed Manufacturing Survey
13:30 CAD ADP Employment Change
13:45 USD Markit Manufacturing PMI Preliminary
13:45 USD Markit Services PMI Preliminary
15:00 USD Existing Home Sales
15:30 USD EIA Natural Gas Storage Change

UK Company Announcements:

Mediclinic

Pets At Home
Tate & Lyle
Intertek Group
Kingfisher

US Company Announcements:

NVIDIA Corporation
Meditronic PLC
TJX Companies

Friday, 22 May

00:30 JPY National Consumer Price Index
00:30 JPY National CPI ex Food, Energy
00:30 JPY National CPI ex-Fresh Food
07:00 GBP Public Sector Net Borrowing
08:30 GER Markit Manufacturing PMI Preliminary
08:30 GER Markit Services PMI Preliminary
08:30 GER Markit PMI Composite Preliminary
09:00 EUR Markit Manufacturing PMI Preliminary
09:00 EUR Markit Services PMI Preliminary
09:00 EUR Markit PMI Composite Preliminary
09:30 GBP Retail Sales
09:30 GBP Retail Sales ex-Fuel
10:00 CHF ZEW Survey – Expectations
13:30 CAD Retail Sales
13:30 CAD Retail Sales ex Autos
18:00 USD Baker Hughes US Oil Rig Count

UK Company Announcements:

Burberry Group
United Utilities

US Company Announcements:

Alibaba Group Holding Limited
Deere & Company

Share article