Daily Market Report 04/09/15

EUR
The ECB kept policy rates unchanged at 0.05% but opened the door to more
stimulus in shape of an extension to the Quantitative Easing package. QE is a
tool used by the ECB to keep Euro Area interest rates artificially low by
increasing the money supply to purchase government debt. This serves as a
monetary stimulus to foster higher inflation and GDP growth.  

ECB President, Mario Draghi, revised down GDP

EUR
The ECB kept policy rates unchanged at 0.05% but opened the door to more
stimulus in shape of an extension to the Quantitative Easing package. QE is a
tool used by the ECB to keep Euro Area interest rates artificially low by
increasing the money supply to purchase government debt. This serves as a
monetary stimulus to foster higher inflation and GDP growth.  

ECB President, Mario Draghi, revised down GDP
growth  and inflation forecasts, citing concerns from
recent emerging markets volatility (the recent stock market crash in China),
taking the lead from BoE Governor Mark Carney.Euro Area Growth was marked
down by 0.1% to 1.4% for 2015 and by 0.2% in 2016 and 2017. Inflation was
revised materially downwards to 0.1% this year, 1.1% in 2016 and 1.7% in 2017.

In other data releases, Euro Area final composite PMIs (Manufacturing and
service sector Purchasing Manager’s Index) were slightly revised up from the
flash estimate  to 54.3 (+0.2 point), edging up in August to a 51-month
high. Germany, posted a significant upward revision in the services sector PMI
up to 54.9 which pushed the composite index up to 55.0.

Positive news came also from Italy, where composite PMIs reached a more than
five-year high (55.0), on the back of strong services sector performance.
Spanish PMIs performed well, with the composite PMI up to 58.8, a four-month
peak, as services confidence hold firm at 59.6 and manufacturing output rose to
56.0. French PMIs disappointed, with the composite PMI revised down to a
seven-month low, from the flash release, to 50.2 (-1.1 points).

USD
The ISM Non Manufacturing Index declined to 59.0 in August from 60.3 in July,
falling less than market consensus had expected (58.2). Initial Jobless
claims  ticked higher to 282k, modestly above consensus
expectations (275k). The Labour Department reported no special factors in the
print, but did note that the beginning of the school year can lead to some
seasonal volatility in initial claims. 

The US Trade Deficit narrowed in July on a decline in imports. The monthly
trade deficit narrowed to $41.9bn in July, below consensus expectations
($42.2bn). At the same time, the June deficit was revised wider to $45.2bn from
the prior estimate of $43.8bn. 

Key Announcements
EUR – 09:00: GDP  (YoY) (Q2) expected to stay the same at 1.2% 

USD – 12:30: Nonfarm Payrolls (Aug) expected to
rise to 220k from 215K

USD – 12:30: Unemployment Rate (Aug) expected to fall to 5.2% from 5.3%.