Central Bank Speeches Galore on Monday

European equity markets are expected to open a little lower on Monday, with investors looking ahead to a week filled with big economic reports and events and numerous companies reporting on the third quarter.

We saw some late selling in equity markets on Friday, with the FTSE, Dow and S&P all experiencing a late dash for the exit into the close, potentially indicating an anxiety among traders and a lack of confidence in the markets. It will be interesting to see how they respond this week as there has been signs that markets are struggling to sustain themselves at these levels.

Source – Reuters Eikon Terminal

Fortunately, the week is filled with potential catalysts that should trigger a reaction in the markets one way or another. The one that stands out is the ECB decision and press conference on Thursday, although no further stimulus is expected to be announced just yet. Inflation may still be well below the central banks 2% target, as is expected to be confirmed this morning, but it has not strongly signaled that it is prepared to act on this right away.

Seeking Policy Direction

We’ll hear from ECB President Mario Draghi later on this evening which should offer more insight into where the central bank stands. Bundesbank Head Jens Weidmann is also scheduled to speak but being one of the more hawkish members of the ECB, I don’t think there’s much we can take away from his remarks, unless of course he hints at further easing which would undoubtedly raise expectations ahead of Thursday’s meeting.

Stanley Fischer, vice Chair of the Federal Reserve, is also due to speak today. Fischer is generally among the more dovish members of the Fed but has indicated at times that he is close to supporting a rate hike soon. I think he’s likely to vote in line with Janet Yellen, who has repeatedly hinted at December. It will be interesting to see if he offers any insight into this today having kept his cards quite close to his chest on this as of late.

Week Ahead ECB and US Inflation to Headline Busy Week

Bank of England Deputy Governor Ben Broadbent and Reserve Bank of Australia Governor Philip Lowe will complete the long list of central bankers making an appearance today. We’ll also get economic data from the US, with the empire state manufacturing index, capacity utilization rate and industrial production figures all being released ahead of the open on Wall Street.

For a look at all of today’s economic events, check out our economic calendar.

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