Market movers for the day ahead – Rabobank

Analysts at Rabobank suggest that the ECB has appeared to be priming markets for a June announcement regarding further tapering of it QE programme.

Key Quotes

“The EUR has duly responded this week by adopting a firmer tone.  This week’s data releases, however, have not necessarily been toeing the line.  This morning German April industrial production registered a -1.0% m/m decline, while the equivalent French series dropped -0.5% m/m.”

“The German production number brought the second decline in three months and follows the release of weak factory orders data yesterday.  That said, as we have been arguing for months, the ECB may be forced to taper more for supply issues than for economic ones.  For this reason we see strong risk that any announcement on QE will be offset by dovish guidance on interest rates.  In our view the interest rate differentials will continue to favour the USD over the EUR medium-term.”

“Today there is no significant US data release to divert market attention away from political events. Despite the weak tone in Germany’s production release, this morning’s April trade data did show a -0.3% m/m fall in exports.  This may be appreciated by Chancellor Merkel as she faces likely criticism from the US and possibly from European allies at the G7 meeting for continually running huge trade and current account surpluses.”

“Canada’s employment report for May is due today with net employment expected to show a healthy bounce. Speakers include the Bank of Italy Governor Visco and the ECB’s Mersch.”