Daily Market Report - 26/11/2015

According to economists polled by Reuters it is widely expected that the European Central Bank will ease policy next week in some way or another, stating the bank cannot pull back now after signalling its intentions so clearly over the past month.

Speculation of further stimulus from the ECB has mounted ever since President Mario Draghi indicated in October that the Governing Council would act if needed to drive up inflation to its 2 percent target.

The consensus from the poll is that the ECB will cut the deposit rate further to -0.30 percent from -0.20 percent now. Forecasters also expect the ECB to increase the amount of bonds it buys each month to 75 billion euros from the current 60 billion euros, or extend its quantitative easing programme beyond September 2016, or do both.

However, Not everyone, within the ECB, agrees over the effectiveness of monetary policy as Sabine Lautenschlaeger, a German member of the core team that sets ECB policy said ever-looser monetary policy had its limits and predicted a diminishing impact of future money printing.

According to another poll yesterday, it is anticipated The Bank of England will hike interest rates in the second quarter of next year but the timing may rest on whether the U.S. Federal Reserve tightens policy in the world's largest economy next month.

George Osborne’s Autumn Statement yesterday states that they expect the UK economy to grow by 2.5% in 2016 and 2.4% in 2017, revised up from 2.3% and 2.4% respectively. Unemployment is set to fall to 5.25 next year and stay there until 2017 when it is set to rise. He is also made a U-turn on controversial and unpopular tax credit cuts yesterday, but admitted the shortfall will be made up by an 11.6B raid on British businesses. 

U.S. consumer spending barely rose in October as households took advantage of rising incomes to boost savings to their highest level in nearly three years, rising just 0.1%, pointing to moderate economic growth in the fourth quarter.

A slowdown in consumer spending has done little to change expectations that the Federal Reserve will raise interest rates next month as other data on Wednesday showed a surge in business spending plans in October and a drop in new applications for unemployment benefits last week

Key Announcements

12:00 - EUR: GFK German Consumer Confidence expected to fall from 9.4 to 9.2.       
USD Bank Holiday - Thanksgiving Day