Markets focus on next week’s central banks’ interest rates decision

EUR

The euro had a strong start to the week on Monday as European Central Bank President Christine Lagarde reaffirmed the Eurozone’s commitment to tackling record high inflation. Speaking yesterday afternoon, Lagarde admitted that the ECB will keep raising interest rates quickly to slow inflation which remains far too high. Lagarde added that rates will need to stay “restrictive for as long as necessary”.

The ECB President’s comments have rebuffed a euro negative article released by Bloomberg last week. According to sources, the ECB was re-thinking its recent hawkish communications to the market with policymakers instead favouring a slower pace of monetary policy tightening. Markets will now remain focused on the data leading up to the next ECB interest rate decision on the 2nd February 2023. Markets are currently pricing in a 50 basis points interest rates hike.

Key announcements

08:30 – EUR – S&P Global Composite PMI (Jan) actual 49.7 expectations 49.6

08:30 – EUR – S&P Global Manufacturing PMI (Jan) actual 47 expectations 47.9

09:00 – EUR – S&P Global Composite PMI (Jan) actual 50.2 expectations 49.8

09:30 – GBP – S&P Global/CIPS Services PMI (Jan) actual 48 expectations 49.9

09:45 – EUR – ECB President Lagarde’s Speech