Market Movers ahead
- We do not expect any announcements at next week’s ECB meeting, as the ECB has hinted that there will be no decision on the QE programme before the October meeting. Instead, the focus is likely to be on how big a problem the current pace of euro appreciation is for the ECB.
- We do not expect the Riksbank to change either the repo rate or the repo rate path. Also, we do not expect any message about terminating the QE programme now. In our view, this is likely to come in October or December.
- In Denmark, we are due to get FX reserves data for August on Monday, which we believe is likely to show that Danmarks Nationalbank has not intervened in the FX market.
- In the UK, the PMI service index for August will give us more information about how the economy is doing in Q3 following sluggish growth in the first half of the year.
- In Germany, there are only three weeks left until election day on 24 September. According to the polls, Angela Merkel is still on track to secure her fourth term in office, as her conservative CDU party remains ahead with around 40% (see German Election Monitor #1: Next euro area election unlikely to rock the boat, 29 August).
Global macro and market themes
- North Korea, looming US debt limit and Hurricane Harvey have brought event risk to the fore lately.
- We look for the US debt limit issue to intensify over the next month and keep a lid on risk appetite and bond yields. However, we see a relief rally in risk on the other side.
- EUR/USD trend set to continue higher – buy on dips.
