Market movers today
* We expect ECB to refrain from cutting rates in connection with today’s meeting but instead signal a rate cut in December. Inflation is ECB’s primary mandate and in our view inflation is now too low for ECB not to cut rates. A rate cut would also take care of possibly rising eonia rates if excess liquidity continues to decline.
* In the UK we expect no change in BoE policy at today’s meeting consistent with the forward-guidance framework. Focus will instead move to the MPC Inflation Report due next week and potential revisions to growth and unemployment forecasts.
* German industrial production is expected to be broadly flat in October after a decent rise in September. Strong factory orders yesterday confirm the picture of continued recovery in Germany. Industrial output in Spain is also due for release.
* We look for US GDP for Q3 to rise 1.8%, slightly below consensus of 2.0%. Subdued growth in consumption and investment indicators points to weak domestic demand
growth in Q3, keeping overall growth below trend.
* US initial jobless claims are expected to fall slightly reverting to a declining trend after technical issues and government shutdown have distorted the data for a while. If the ECB against our expectations already cut the refi-rate by 25bp today, we expect the Danish central bank to only partially follow.
Read the full report: FX Daily
Danske Bank