Market movers today
• The likelihood of a cut in either the refi rate or the deposit rate in connection with today’s ECB meeting is, in our view, extremely low – not least after PMIs released across the euro area showed tentative signs of stabilisation across the board. The ECB might present an ABS purchasing programme to support lending to small- and medium-sized companies but we doubt it is ready to give details and the programme might underwhelm,.
• BoE is also unlikely to announce new stimulus today in connection with its last meeting with Mervin King as governor. Recent data including yesterday’s service PMI suggests that growth is moving up a gear and for that reason it also looks increasing questionable whether Mark Carney will deliver additional easing when he assumes the BoE governorship.
• In the data calendar the most interesting release today is German factory orders. Following two months of strong gains in factory orders, it would be a surprise if there had been no payback in April. The weekly initial unemployment claims in the US will as usual also be interesting as an indicator for the strength of the labour market.
• We expect Nationalbanken to follow the ECB and keep rates on hold. March house prices for Denmark are likely to show further stabilisation.
Read the full report: FX Daily
Danske Bank