Today's ECB meeting will be the main attraction. We expect the ECB to deliver an aggressive easing move by cutting the refi and deposit rates, taking the latter into negative territory. For more about the implications of negative rates and the Danish experience, see here .
At the same time, we expect the ECB to boost liquidity through a new 3Y LTRO (perhaps with a fixed rate) and potentially introduce credit easing measures.
The Bank of England meeting should be a non-event with unchanged policy. Attention has shifted towards when the members will start expressing personal views of when to start hiking the Bank Rate, but this will most likely first be seen in the minutes from the meetings (not released until 18 June).
German factory orders are due for release and we expect an increase in April after temporary factors contributed to a decline in March. Our expectation follows although German business indicators have softened a bit lately and we see downside risk to our forecast as the strong euro could have dampened orders.
Euro retail sales in April could show a decline after increasing in each month in Q1, which is a bit unusual. On the other hand, consumer confidence has improved considerably and points to higher private consumption.
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