Today’s focus is on the ECB Governing Council meeting, and the market is closely watching its outcome. Regarding the policy interest rate, there is a consensus in the market for a 25 basis point rate hike. However, there is a slightly toned-down outlook for a rate hike in September. Even the hawkish members have been emphasizing that any further rate hikes will depend on data, and they are becoming more cautious about providing clear statements on additional rate hikes. The spotlight will be on ECB President Lagarde’s press conference, where any moderation in the hawkish stance and a greater emphasis on inflation containment could create selling pressure on the Euro.
However, the actual outcome may differ from expectations, and the market reaction after the ECB meeting could be temporary due to potential disruptions caused by the FOMC meeting and the timing ahead of the Bank of Japan’s decision. Economic indicators to be released in the international market after the ECB meeting will primarily focus on the United States. These include US Real GDP (Q2 2023, preliminary), US Initial Jobless Claims (07/16 – 07/22), US Wholesale Inventories (June, preliminary), US Durable Goods Orders (June, preliminary), and US Existing Home Sales (June). The US GDP preliminary estimate is expected to be +1.8% on a quarter-on-quarter annualized basis, showing a slowdown from the previous +2.0%. The growth of personal consumption is expected to decline from +4.2% to +1.2%, supporting the market’s speculation about a pause in rate hikes following the FOMC meeting.
In terms of speeches and events, the main focus will be ECB President Lagarde’s press conference. Additionally, there will be a US 7-year Treasury Note auction ($35 billion). Corporate earnings announcements are also significant today, with Mastercard, AbbVie, McDonald’s, Comcast, Intel, Roku, Ford, and T-Mobile among the companies drawing attention.
The market is currently awaiting the ECB decision, and the subsequent EUR movement will be closely monitored.