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Will ECB signal the end of its easing bias?

business-articlesWill ECB signal the end of its easing bias?
  • ECB meeting in focus
  • JPY may be pressured by dovish BoJ
  • German production figures may bolster EUR
All eyes on ECB policy meeting

The European Central Bank (ECB) will deliver its latest rate decision this afternoon, with the outcome of its March policy meeting likely to have a major impact on currency markets.

This will be the first rate decision from the bank after receiving its latest assessment of the Eurozone’s economic performance in 2017.

With the Eurozone showing robust growth last year, investors are hoping for a more bullish tone from the ECB.

While the bank is not expected to alter its monetary policy just yet, markets are hoping that the removal of the ECB’s easing bias will signal that the bank is moving towards normalising its monetary policy.

This will see the policymakers remove any mention that the ECB could increase its stimulus programme again in the future if it felt it was necessary.

BoJ likely to remain bearish

The ECB won’t be the only central bank to hold a policy meeting over the coming session with the Bank of Japan’s (BoJ) latest rate decision likely to set the tone for JPY in overnight trade.

Economists do not expect policymakers to make any alteration to its monetary policy at today’s meeting despite some hawkish speculation earlier in the year.

In fact many analysts now believe that the BoJ may still be some way off a stimulus exit.

This follows comments from BoJ Governor, Haruhiko Kuroda earlier in the week when he suggested that while the bank may discuss tapering its stimulus programme in 2019 there was no guarantee that it would actually take place then.

German factory output expected to rebound

While the outcome of Thursday’s ECB meeting is likely to remain the main driver of movement in EUR for the remainder of this week, the release of Germany’s industrial production figures may provide the euro an extra lift early on Friday.

After slumping 0.6% in December analysts are optimistic that factory output will have rebounded at the start of this year, with forecasts that production will have risen 0.5% in January.

Economists suggest that any uptick in output will have been supported by increased domestic consumption as it continues to steadily rise.

Upcoming Data

Thursday, 8 March, 2018
12:45                     EUR ECB Rate Decision 

Friday, 9 March, 2018
03:00                     JPY BoJ Rate Decision
07:00                     EUR German Industrial Production
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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