Draghi sends Euro higher

24 September, AtoZForex.com, Lagos – The Manufacturing PMI data from Germany and France were generally okay, all coming above the 50 level benchmark. The most positive was the French preliminary PMIs for September, which beat expectations to come at 50.4, having remained under the 50 in the past two months. A release above 50 shows expansion while below 50 depicts contraction.

The Euro strengthened a bit after the release, but gave back its gains after the German figures failed to impress. The German Flash Manufacturing PMI was 52.5, a tad lower than forecast of 52.8. However, the average reading for the third quarter as a whole was the best over a calendar quarter since Q3 2014. Manufacturers and services providers both reported slightly weaker growth of output.

Draghi sends Euro higher

ECB president, Mario Draghi made hawkish comments which confirmed some market expectations that the regional central bank is likely to expand its asset buying program. He stated that risks to Europe's inflation and growth outlook have heightened as a result of the emerging market slowdown but the ECB needs more time before deciding on further stimulus.

The inflation target of 2% is a long shot away, but that the euro zone's central bank is ready to beef up its 1 trillion euro plus asset buying program if needed. Before such steps are taken, more evidence to confirm the situation of China’s slowdown will be sought, as well as appraise whether the euro's rise and falling oil prices will divert inflation from its projected path.

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Also, it need to be clear whether the slowdown in emerging markets is likely to be temporary or permanent and to assess the driving forces behind falling commodities prices and recent turbulence in financial markets. The bank also expects inflation may turn negative in the next few months, as it confirmed that it may take longer than expected to hit the 2 percent target.

German Ifo Business Climate (8:00 A.M GMT)

The German Ifo Business Climate which surveys about 7,000 businesses, asking respondents to rate the relative level of current business conditions and expectations. The figures have beaten expectations in the last three months.

Last month, German business confidence unexpectedly rebounded as companies brushed off concerns that China’s slowing economy will drag on global growth. This month’s release is forecast to come at 107.8.

ECB Targeted LTRO (9:15 A.M GMT)

The total value of money the ECB will create and use to loan to Eurozone banks is forecast to be reduced to 50.3B from 73.8B in the last quarter. A Reuters poll showed euro zone banks are expected to request around 50 billion euros in cheap funds they will have to repay in September 2018.

US Data

Core Durable Goods Orders m/m and unemployment claims are due at 12:30 P.M GMT. The Core Durable Goods Orders m/m shows a forecast of 0.2percent change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items. This is potentially the lowest figure since May on perceived weakness in spending.

Unemployment claims on the other hand is expected to remain positive, forecast to show about 268k individuals filed for unemployment insurance for the first time during the past week

Fed Chair Yellen Speaks (9:00 P.M GMT)

The Federal reserve chairman, Janet Yellen is due to deliver a speech titled "Inflation Dynamics and Monetary Policy" at the University of Massachusetts. Investors will be listening for any clues that will point towards timing for rate hikes.

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