Euro and franc price action diverged again for another week, as the former was bogged down by Brexit risks while the latter banked on risk aversion. What’s next?
Euro zone flash PMI readings (staring July 24, 7:15 am GMT)
Time for another batch of PMI readings! Now these leading indicators from the largest countries in the bloc and the region overall provide traders with clues on economic performance could turn out.
For the current month, France is looking at a possible decline in its flash services PMI from 52.9 to 52.7 and a dip from 51.9 to 51.6 in its flash manufacturing PMI. If so, these would reflect a slower pace of expansion in the industries.
In Germany, the flash manufacturing PMI is projected to tick higher from 45.0 to 45.1 to signal a slightly slower pace of contraction. Meanwhile, the flash services PMI likely fell from 55.8 to 55.3.
Overall, the euro zone flash manufacturing PMI probably held steady at 47.6 while the flash services PMI is expected to have dropped from 53.6 to 53.3. Not the rosiest picture, isn’t it?
ECB monetary policy statement (July 25, 11:45 am GMT)
The excitement doesn’t stop for the shared currency as the ECB preps for its monetary policy decision later in the week. No actual interest rate changes are expected for the time being, but note that their earlier one was seen as more dovish than usual.
Word through the grapevine is that Governing Council members are in no rush to ease this month, likely preferring to wait until September when the next set of growth and inflation forecasts are released.Still, any changes in their forward guidance could set the tone for euro price action in the coming weeks. In their previous statement, the ECB said that it “now expects the key ECB interest rates to remain at their present levels at least through the first half of 2020.”
Head honcho Draghi highlighted risks from geopolitical factors and trade then. These concerns are still very much present these days, and the central bank might even add the increasing possibility of “no deal” Brexit to the mix.
Missed last week’s price action? Read the EUR & CHF price review for July 8-12!