No Help for the ECB From Economic Data of the Last Two Days

Posted Thursday, July 25, 2019 by
Skerdian Meta • 1 min read

The European Central Bank has turned pretty dovish recently, judging by their rhetoric. They might have hoped for some positive figures this week, but the numbers keep getting worse instead of getting better. Inflation is pretty low, with core CPI (consumer price index) at around 1%. We heard last week that the ECB is going to lower their inflation expectations, so if they are to do that, today is the day.

Yesterday we had the manufacturing reports coming out of the Eurozone and saw French manufacturing reach stagnation again. But it’s not as bad as German manufacturing, which fell deeper in recession, together with the Eurozne manufacturing. Manufacturing activity has been contracting all this year and given that Germany is the engine of Europe, it should have a big impact on the ECB decision.

Earlier this morning the business climate in Germany showed yet further deterioration, which will have a negative impact on the economic data in the coming months. So, there’s no lifeline for the ECB from the economic data. Instead, it gives them one more reason to turn even more dovish, so don’t be surprised to see a rate cut today.

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