ECB Minutes Breakdown & Hogan comments


  • Data pointing to weak but stabilizing growth dynamics
  • There are some indications of a mild increase in core inflation
  • Sentiment improves over the receding global trade progress
  • Some comments overshadowed the data point as Hogan dropped a bombshell
  • EU Trade Commissioner Hogan : There is not going to be unity on trade between EU and US in the short term



ECB Minutes
The ECB have just released their latest minutes from the meeting in December.  Here are some highlights:

  • Data pointing to weak but stabilizing growth dynamics
  • There are some indications of a mild increase in core inflation
  • Sentiment improves over the receding global trade progress

The ECB have already kickstarted QE which has had some effect on the data as PMIs showed last month but they are no way out of the woods just yet. Concerns about growth are still firmly in the policy makers minds as they will likely say that an accommodative stance remains appropriate. The one bit of decent news that the ECB has had is the small uptick in inflation to 1.3% from 1% but this was largely expected by analysts. Having said that, tomorrow we get the latest CPI reading and analysts are forecasting no change (1.3%). German inflation remained steady today with the YoY figure at 1.5% in line with market expectations.

Next week we also have the ECB rate decision where again no change is expected in the main interest rates. However, we are due to hear from ECB’s Lagarde today so will she give us any clues ahead of next week?

Analysts are still not too sure if the economic slowdown in the EU is over just yet. The main issue is still the manufacturing sector which is in a recession. All in all, I think the ECB will remain on hold, but the risks are still around.

EUR/USD has moved higher today but much of this is due to USD weakness. The market defended the 1.11 level around January 9th and the price has only moved 50 pips or so higher ever since. If there are any signals from the ECB today that they are holding off to wait for more data the market could rally but as always there is a good chance they could strike a dovish tone and say they will continue to data watch.

Just as the minutes were released EU Trade Commissioner Hogan stated "There is not going to be unity on trade between EU and US in The short term" this is significant as Trump has been threatening extra tariffs on car purchases from the EU recently. The EUR spiked slightly after the comments.
 



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