Today the European Central Bank’s Governing Council will announce their latest interest rate decision and monetary policy statement at 11:45. The market is expecting no change however President of the European Central Bank Mario Draghi’s press conference shortly after could have an immediate impact on EUR exchange rates.
What affect does current Eurozone economic performance have on their QE programme?
Eurozone inflation has improved to 1.3% over the last 12 months up 0.2% compared to this time last year. However Core inflation which is the important figure remains subdued at 1.1%, 0.9% below the European Central Banks 2% target. With European growth numbers exceeding expectation throughout 2017, many economists were under the impression the Quantitative Easing programme would come to an end towards the end of the year. However with inflation remaining below the ECB’s target there is an argument to extend the QE program past 2018.
I fully expect Mario Draghi to try and keep his cards close to his chest and announce that the QE may or may not finish at the end of the year and therefore give himself more time. Nevertheless if there is any underlying tone, investors will trade there currency accordingly. Personally I expect either a non-event or slight Euro weakness.
Hw could US GDP figures impact EUR/USD?
In other news, another factor that could have an impact on Euro exchange rates this week, is the revised US Gross Domestic Product numbers and Core personal Consumption expenditure numbers Friday. The GDP numbers are set to show a considerable fall to 2.3% from 2.9% and Personal consumption is also set to fall from 1.9% to 1.5%. If this occurs there is an argument to suggest that the Euro will strengthen as investors sell off their US Dollars and buy Euros as this is the most traded currency pair globally.