Market Movers Today
The main event today is the meeting at the ECB with an announcement on the policy rate and quantitative easing (QE) due at 13:45 CET followed by President Mario Draghi's press conference, due to start at 14:30 CET. We expect the ECB to remove its readiness to increase QE in size (but to keep the flexibility in terms of duration) and to discuss tapering. In our view, a tapering discussion would be in line with the latest communication from Draghi, that in a situation where the economy continues to recover, monetary policy tightening could be needed in order to keep the policy stance 'broadly unchanged'. However, the risk is that Draghi will express some dovishness due to the latest EUR appreciation and surge in bond yields. See ECB preview: Another minor hawkish twist , 14 July.
The euro area preliminary consumer confidence for July is due for release today and is expected to have continued to improve. Last month it rose to the highest level since 2001, signalling continued growth in consumer spending. In the UK, the June retail sales figures will be scrutinised for any impact of negative real wage growth. See Research UK: Negative real wage growth has slowed GDP growth , 18 July.
In the US, the Philly Fed index for July will be in focus after Empire manufacturing dropped in July. If the Philly Fed has also weakened, it will be another signal of some payback in ISM manufacturing after it rose sharply by close to three index points from May to June.
The South African central bank is apparently due to make an announcement on monetary policy today. Consensus expects the central bank to keep its key policy rate unchanged at 7.00%, but the risk is that it will deliver a 25-50bp cut.
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