The week ahead is relatively quiet on the economic front as the markets are likely to take a breather from the Trump rally. The lack of economic data shifts focus to the FOMC meeting minutes which stands out against a quiet week from the US and comes just ahead of Thursday’s Thanksgiving holiday. In Europe, IHS Markit’s flash PMI’s will be in focus shedding light on the preliminary manufacturing and services landscape for November.
Eurozone Flash PMI data
It has been a long and hard week for most currencies against the US dollar. The euro posted one of the longest losing streaks in a while, falling for a straight 9-day. Comments from the ECB officials did not help either. ECB President Mario Draghi did not sound too upbeat on the prospects of QE tapering in December noting the lack of conviction in inflation, while ECB’s Mersch last week was more explicit in noting that it was too premature to talk about tapering the ECB’s monetary stimulus program.
ECB President Mario Draghi will be speaking again next week to the European Parliament. Nothing new is expected to come out of this event after on Friday, the ECB President said the economic recovery in the eurozone was pinned on ECB stimulus, indirectly hinting that the €80 billion a month of bond purchases will likely be extended, a decision that could be taken when the ECB meets next in December. “We cannot yet drop our guard,†Draghi said a banking conference in Frankfurt. “The ECB will continue to act, as warranted, by using all the instruments available,†he said.
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Markit Eurozone Composite PMI: 53.3
Manufacturing and services PMI is expected to remain fairly stable from October although services sector is expected to outperform manufacturing. The German Ifo business climate data is due out on Thursday and is expected to show an insignificant increase to 110.6 from 110.5. In October, the Ifo business climate posted strong gains as the index rose to the highest level since April 2014.
