August 21 Economic Calendar
On Monday, we have a relatively quiet day, without major events or indicators of importance in the economic agenda.
Economic calendar for the rest of the week
On Tuesday, Germany will publish its ZEW survey for August, while on Friday, we'll have the country's IFO survey for the same month. The forecast is that all these indices have declined slightly, even though they will still be maintained at healthy levels. Although the index of expectations of the ZEW survey decreased somewhat in recent months, the index of the current conditions of the same survey remained close to the historical peaks. Meanwhile, the Ifo survey's composite index reached a new record in July for the third consecutive month, indicating that "the sentiment among German companies is euphoric," as expressed by the Ifo Institute. Therefore, it is unlikely that any minor decrease in these figures will be particularly worrisome to policymakers in the ECB.
On Wednesday, the preliminary PMI manufacturing and services of the euro area for August will be the protagonists. The forecast is that the manufacturing index has fallen a bit, while the service sector's data is expected to remain stable. These indices receded a little in recent months, although they still remain relatively high in comparison to recent years, suggesting that the economic recovery of the bloc continues at a solid pace. It is therefore likely that even in the case of a moderate fall in the manufacturing sector data, as long as these figures are maintained at healthy levels, the ECB's economic policy plans are adversely affected. Analysts still consider an announcement on a reduction in stimulus at one of the upcoming political meetings.
On Thursday, in the United States, Jackson Hole's Annual economic symposium will begin (24-26). Organized by the Kansas Fed, this is a great event where the key policymakers of the world gather to exchange ideas. This time it will be no different, given that two of the main speakers will be ECB president Mario Draghi and Fed President Janet Yellen, who are speaking on Friday.
Starting with Draghi, prior to this meeting there were expectations that he would use this speech to provide some clues about a possible exit from the ECB's QE program. However, on Wednesday, a press report with sources from the ECB suggested that the president of the entity will not give a new policy message, but will focus on the topic of the Symposium; Foster a dynamic global economy.
Despite this, not everything is discouraging news for the EUR, however. Since Draghi is unlikely to provide important signs of policy, this means that there is also less chance that it will use this discourse as an opportunity to adversely affect the euro. In any case, despite this report, investors will surely be attentive to any potential comment Draghi on politics. "ECB sources" do not have the same credibility as the official communication of the ECB, implying that there is still a probability (albeit modest) that Draghi mentions something about the ECB's policy and/or the euro in its comments. If it does, it may be a moderate message that avoids insinuating any change in the QE program, in order to avoid further appreciation of the euro and an unwanted hardening of financial conditions.
As for the general picture, the ECB remains ready to make an announcement on "fall" QE adjustments, suggesting that investors will probably receive new signals at the September or October meetings. While inbound economic data is likely to play a critical role, it is also possible that a realistic scenario is the one in which the bank removes the bias of its program QE in September, thus opening the way for a formal announcement in October that the pace of purchases QE could be reduced by the end of the year.
With regard to Janet Yellen, her speech will focus on financial stability and, as such, any comment on the pace of future interest rate hikes seems somewhat unlikely. Having said that, as with Draghi, his remarks will be closely followed, as he could always make a reference to the perspective of the US economy that indirectly conveys his political vision. If Yellen echoes recent comments by new York Fed President William Dudley, and suggests that he could vote for another rate hike this year, markets could begin to express in the price action the probability of such action. The possibility of another increase this year was reduced even more recently, after the minutes of the July FOMC meeting showed that more officials were
Comment If you liked this article
If you want me to recomin some BRIKER communicate with me leaving a comment here
0 Comments: