Single Currency Unchanged, European Services PMIs
The single currency is calm. It’s trading up 0.06% at 1.2463. Eurozone retail sales fell 1.1%. Today, Mario Draghi will deliver a speech before the European Parliament and US will release ISM Non-Manufacturing PMI. Tomorrow, Germany will present Factory Orders and the US will feature JOLTS Job Openings.
Eurozone inflation remains at low levels, which favors the extension of ECB asset purchase program. The program is prolonged to September and Mario Draghi assured that rate hike will only be executed after it’s over, despite continuing speculations about policy tightening. The President added that it might be increased or extended even further. Benoit Coeure (executive board member) has recently expressed his support of Mario Draghi’s view.
Today, Jerome Powell officially takes over as the Fed Chair. Janet Yellen in her final statement said that she was slightly upset for not being appointed for the second term but added that Powell will do a good job. Yellen acknowledged a “much better capitalized financial system” and “stronger banking system”. Fed maintains its rate at 1.25-1.5%. Members express positive outlook of the employment growth, household spending and business fixed investment. Moreover, they see some improvement in inflation. March rate hike is now priced in 80% odds (up from previous 74%). Some analysts even price in 90% chance.