LONDON (Reuters) – Data from both sides of the Atlantic will give clues in the coming week on just how bad the eurozone economy is and just how sustainable is its US counterpart.
Europe offers a rate meeting from the European Central Bank and a new slate of economic forecasts; the United States will release its influential monthly jobs data.
Purchasing manager indexes for the past month will also show how businesses see things shaping up in the United States and Europe. One for China’s has already come in lower than expected.
For many, the ECB meeting on Thursday will be the main money event – despite the fact that it is not likely to be one of action or suspense.
As usual, the attention will be on ECB President Mario Draghi’s nuances at the news conference that follows the likely non-move on rates. When it comes to the ECB, the news is often all about the journey rather than the destination.
This week’s inflation data let the ECB off the hook on taking any immediate additional action to combat the threat of deflation.
At 0.4 per cent in October, inflation is worryingly slight, but it is higher than it was a month earlier.
ECB policymakers are also in no rush to move on to something new when they have not yet seen how their targeted loans and purchases of asset-backed securities are doing.
Many in financial markets would like to see the ECB move to a full quantitative easing (QE) asset-buying programme like the one the US Federal Reserve has just closed. But as these words from ECB Governing Council member Ewald Nowotny suggest, it is not likely.
“I don’t think we should be pushed by the markets to produce a new programme at every meeting we have.”
The bank will also be looking at the US Federal Reserve’s ending of QE and relatively hawkish tone for some spillover succour. The euro is down more than 1.5 per cent against the dollar since the Fed meeting on Wednesday, and down more than 10 per cent since May.
A weaker euro not only boosts eurozone exports, it imports inflation, both of which the ECB wants to see.
The nuance being sought on Thursday, however, will be whether there is any momentum towards full QE and how German opposition could be overcome.