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29 Apr 2013
Forex Flash: Expect this week to build into an ECB crescendo - Deutsche Bank
FXstreet.com (Barcelona) - Jim Reid of Deutsche Bank is expecting this week to start calmly and then build into a crescendo, culminating with the ECB meeting, the final PMI´s/ISm and US NFPs on Friday.
With regards to the ECB, he feels that it seems that a slight majority of economists expect a 25bp cut from Mr. Draghi Indeed at this point 42 out of 69 economists polled by Bloomberg are looking for 25bps. He adds that DB economists think improving bank credit supply relative to demand favours a conventional over an unconventional monetary policy response. He writes, “We also have the conclusion of a 2-day FOMC meeting on Wednesday with Joe Lavorgna expecting Fed officials to reiterate their easing bias by continuing the current pace of open-ended bond purchases. Interestingly recent Fed-speak (by Yellen, Dudley, Evans, Bullard) had reinforced the notion that the pace of purchases could be fine-tuned (up or down) in response to economic developments so fears of an early ‘tapering’ have eased quite considerably.” Indeed he notes that the DB US rates strategist noted that the tenor of Fed talk has recently shifted away from the topic of downshifting monthly asset purchases into an incipient debate about the thresholds for when to expand the QE purchases. As for payrolls the market is looking for some monthly improvement in April. For now, he notes that the market consensus and DB are looking for a headline/private payroll increase of 150k/163k and 190k/200k, respectively – up from 88/95k in March. he finishes by noting that most economists polled by Bloomberg are expecting the unemployment rate hold firm at 7.6%.
With regards to the ECB, he feels that it seems that a slight majority of economists expect a 25bp cut from Mr. Draghi Indeed at this point 42 out of 69 economists polled by Bloomberg are looking for 25bps. He adds that DB economists think improving bank credit supply relative to demand favours a conventional over an unconventional monetary policy response. He writes, “We also have the conclusion of a 2-day FOMC meeting on Wednesday with Joe Lavorgna expecting Fed officials to reiterate their easing bias by continuing the current pace of open-ended bond purchases. Interestingly recent Fed-speak (by Yellen, Dudley, Evans, Bullard) had reinforced the notion that the pace of purchases could be fine-tuned (up or down) in response to economic developments so fears of an early ‘tapering’ have eased quite considerably.” Indeed he notes that the DB US rates strategist noted that the tenor of Fed talk has recently shifted away from the topic of downshifting monthly asset purchases into an incipient debate about the thresholds for when to expand the QE purchases. As for payrolls the market is looking for some monthly improvement in April. For now, he notes that the market consensus and DB are looking for a headline/private payroll increase of 150k/163k and 190k/200k, respectively – up from 88/95k in March. he finishes by noting that most economists polled by Bloomberg are expecting the unemployment rate hold firm at 7.6%.