• Earnings, central banks and data galore this week;
  • EUR pops higher as unemployment falls to nine year low;
  • US data eyed as busy week gets off to a slow start.

It’s been a moderately positive start to trading on Monday, with stocks in Europe squeezing out small gains which is lifting US futures ahead of the open on Wall Street.

There’s going to be no shortage of catalysts this week with earnings season being accompanied by major central bank announcements and big economic data. Arguably the two most notable events will be the Bank of England decision and US jobs report, both of which will come later in the week, but there’s still plenty to watch out for before then with this morning already seeing unemployment and inflation data from the eurozone and PMI data from China.

The euro was briefly boosted by the euro area data which again showed the economic recovery gaining traction as unemployment fell to its lowest level since February 2009 and core inflation creeping higher. While this will be music to the ears of policy makers at the ECB as they prepare for further reductions in asset purchases later this year, it’s worth remembering the low base that the region is recovering from.

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Unemployment at 9.1% is still extremely high and when you break that down by country, it becomes much higher again in some places. Core inflation is also only at 1.3% which is still well below the ECBs target and with the currency appreciating strongly this year, downward pressures here will continue to build. The central bank should therefore tread very carefully when it comes to removing stimulus, as I expect it will.

Today is a little quiet on the earnings front, with the likes of Apple and Pfizer not reporting until tomorrow. It’s also quiet on the data side with pending home sales and the Chicago PMI the only numbers scheduled for release. We may therefore see traders positioning themselves ahead of the rest of the weeks major events today, with a bad jobs report on Friday delivering another blow to the possibility of another rate hike this year.


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