ZuluTrade Blog

Market Recap – ECB Monetary Meeting

Market View | Thursday, July 25, 2019 10:45 AM GMT

Some days before the expected, and already priced rate cut by the FED, today it is the turn of Mario Draghi to communicate the monetary policy of the ECB. As his term ends on October, Draghi will be the only President of the ECB with zero rate hikes. At the 6th of June meeting, Mario Draghi communicated that the prolongation of uncertainty (outcome of US-China trade relations, and outcome of Brexit) made the ECB postpone any potential rate change for another 7 months (rates will remain the same at least through 1H2020). There is no sign of inflation expectations de-anchoring, or a probability of deflation or recession. On the other hand, Draghi admitted that there have been talks on the reintroduction of QE or a rate drop, something that was re-emphasized at the latest ECB's forum on Central Banking. Markets are expecting some details on that front, but the probability that Draghi communicates confidence and does not deliver the expected dovish tone, is present.

Meanwhile, the Parliament of Spain is providing a second vote of confidence for the Socialist Party. It all depends on the votes of Podemos. If they will vote for the Socialists then a government will be formed, if not then the country will head to new elections on November, the fourth in less than four years.

Amazon, Alphabet(Google), Nissan and Intel are the most significant earnings announcements of the day.

Macro releases: Yesterday’s German and European Manufacturing PMI was disappointing. Today, the focus is on the ECB and the US core durable goods orders.


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