Same Old Europe
Results out yesterday merely highlighted much of what we already knew about the UK, Europe and the US.
The Eurozone continues to be a source of worry for most observers as new orders continued to fall, the service sector declined the most in more than a year and manufacturing index in Germany and France declined showing little to be cheerful about. There are more fears about stagnation so there is further pressure on Mario Draghi and the ECB to stimulate growth. Of course, they can’t just do this by clicking their fingers. The ABS purchasing programme is effective as of today, but it is unlikely that it will solve all the issues. Quantitative easing is seen as being that answer, but is it really? Could it be that actually the Eurozone is struggling just as the rest of the world is struggling, as there is a reduced global demand for Euro products? Economic sanctions with Russia are hardly helping matters. So maybe, QE won’t solve everything.
Yesterday’s US data was mixed with initial jobless claims falling, CPI coming in as expected and PMI unexpectedly falling. Overall, with the trend in its favour, the markets saw it all as slightly positive for the US Dollar.
Japan continues to make headlines as the Yen continues to freefall. The Japanese Finance Minister has commented that the “pace of decline over the past week has been too fast” and whilst this may have initially put the brakes on the fall, I wouldn’t expect this to last for long.
This morning we have Mario Draghi speaking early to which the markets will be listening intently and then net borrowing from the UK and CPI from Canada.
Have a good weekend!