ECB meeting on 8th Sept may well be “live”- Westpac

Tim Riddell, Research Analyst at Westpac, suggests that after a prolonged 7 week break, the ECB meeting on 8th Sept may well be “live”.

Key Quotes

“Final Aug PMIs, German and other key country industrial production and trade data are unlikely to alter the profile of a persistently vulnerable EU recovery.

Bias:

• Some six months after the ECB cut their refi. rate to zero, pan-EU inflation has remained below 1% and unemployment above 10%. Previously firm survey data began to slip into late August. As market participants return, they will focus on the ECB’s meeting. The flagging survey data began to weigh on EUR even before USD started to outperform. Problems in the Italian banking sector may also come back into focus and Draghi may repeat comments after the last ECB meeting about action to support banks.
• EUR/USD has drifted to the centre of its range of the past year. Potential of ECB action could see EUR/USD slide towards the lower bounds of its 1.05-1.15 range.
• A weak KOF survey saw USD/CHF push towards 0.99 and a break above 1.00 could occur if PMI data is also weak.”