ECB and Euro

ECBs’ chief economist confirms June meeting as essential for deciding on the bond-buying program

Jun 7 • Morning Roll Call • 334 Views • No Comments

Yesterday Mr. Peter Praet, chief economist of ECB has confirmed that the meeting to be held next week will be crucial to reach the decision on when to end the bond buying program. In addition, according to Bloomberg, the members are expecting a discussion that would lead towards a public announcement on when it is expected from ECB to cease purchases, and it is clear that the Governing Council will have to make the required assessment if the progress so far was sufficient in order to guarantee a measured unwinding of the net asset purchases. The hawkish comments influenced the borrowing costs across the EU higher, especially with the comments coming from Mr. Praet that the ECB is confident in inflation rising back to the set target. In addition, ECBs’ President, Mario Draghi may use the press conference that will be held after the meeting to signal an announcement to be expected in the following month. As the economic indicators have shown up to now, the growth pace did slow down, however the expansion is intact and the inflation rose last month. For now the ECB it is expected that ECB will keep buying debt at the set pace and purchases are not expected to end abruptly.

Coming back to the inevitable trade war, EU is expected to impose additional duties to US imports starting from next month. According to Reuters, the European Commission has gained support by the EU members to set 25% duties on up to eur 2.8 billion of US exports, all as a retaliation on what is seen as illegal US action to impose its own tariffs on incoming EU steel and aluminum. In addition, duties between 10-50% may be imposed on a further eur 3.6 billion of US imports in March 2021 or even sooner if WTO rules that the imposed US measures are illegal.

With regards to the macro economic news, Canada was in limelight, where the results have shown that the trade deficit of the country has shrunk in April to a 6 month low, coming at -1.9 billion, as opposed to the forecasted -3.4 billion. Exports of the country have increased by 1.6% with more shipments of metal and non-metallic mineral products, consumer goods and energy products, and imports have fallen by 2.5% as imports of motor vehicle and parts dipped by 5.8% just after marking a two months of strong increases.

Today investors will mostly be concentrated on the news coming from the UK with Halifax HPI (House Price Index) as it is seen as a leading indicator of the housing industry health; and later in the day US unemployment claims are expected, where the forecast is at 223k, as opposed to the results in May that came positive at 221k.
ECONOMIC CALENDAR EVENTS FOR JUNE 7th

EUR German Factory Orders m/m
EUR French Trade Balance
EUR Revised GDP q/q
GBP Halifax HPI m/m
GBP MPC Member Ramsden Speaks
USD Unemployment Claims
CAD BOC Gov Poloz Speaks

 

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