Economists and market participants almost unanimously agree that the ECB will raise interest rates 25 basis points on Thursday to 4.25%.

"In a testimony to the European Union parliamentarians, ECB President Trichet said that the ECB saw an 'acute' risk of a wage-price spiral, even though he also played down the possibility of 'a series of [rate] increases'. If the ECB does think that the risk of a wage-price spiral is 'acute', the possibility of further rate hikes is high," wrote economist Martin Enlund from Handelsbanken.

Thursday will see final June PMI services figures from Markit Economics for France, Germany and the euro zone as a whole. No revisions to the preliminary estimates are expected.

Additionally, euro zone retail sales data will be released for May. In monthly terms, they are expected to have recovered from their 0.7% declines in the previous month and show a 0.6% gain in May. April's figure was revised down from -0.6% to -0.7%.

Conversely, euro zone retail sales are expected to have continued to fall in annualized terms, declining 0.7% after having fallen 3% in April, revised down from -2.9%.

Economists from Barclays Capital lowered their projection for euro area retail sales to 0.6% month-over-month from an original forecast of 1.2% month-over-month. "We continue to see the risks to that forecast as heavily skewed to the upside, with support to euro area retail sales expected not only from Germany, but also from France and a number of smaller euro area economies," Barclays Capital noted in their report.

All times in EDT

3:45 IT PMI Services June Exp: 47.7 Prior: 48.1

3:50 FR PMI Services June Final Exp: 49.2 Final Prior: 49.2

3:55 DE PMI Services June Final Exp: 53.3 Prior: 53.3

4:00 EU PMI Services June Final Exp: 49.5 Prior: 49.5

4:00 EU PMI Composite June Final Exp: 49.5 Prior: 49.5

4:30 GB PMI Services June Exp: 49.7 Prior: 49.8

4:30 GB Bank of England Second Quarter Credit Conditions Survey

4:30 GB Official Reserves (Changes) June Prior: -$97M

4:30 GB U.K. Bank of England Quarter credit Conditions Survey

5:00 EU Euro-Zone Retail Sales (M/M) May Exp:+0.6% Prior: -0.6% Revised: -0.7%

5:00 EU Euro-Zone Retail Sales (Y/Y) May Exp:-0.7% Prior: -2.9% Revised: -3.0%

5:00 EU Eurostat Publishes Euro-Area Retail Sales

7:45 EU ECB Announces Interest Rates Exp: 4.25% Prior: 4.0%

8:30 EU ECB President Jean-Claude Trichet to speak at monthly press conference

3- July IT Bank of Italy Governor Draghi in Mirandola, Presents Book

3- July EU's Kroes Visits Iceland

By Steve Stecyk, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, This email address is being protected from spam bots, you need Javascript enabled to view it

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