ECB: No Major Projection Changes Expected, But Growth Risks To The Downside
The ECB’s September macroeconomic projections are not expected to see major deviations from June. The median of analyst expectations compiled by MNI see a 10bps upgrade to 2024 core HICP (to 2.9%), and 10bps downgrades to 2024 and 2025 GDP (to 0.8% and 1.3% respectively).
- The weak growth outlook has come more into focus since the beginning of the summer, and commentary surrounding downside growth risks will be closely watched.
- In this light, we note that 5 of the 12 analysts whose forecasts we have compiled have an expectation (or see a chance) of 2024 growth seeing a 20bps downward revision to 0.7%.
- On core inflation, a handful of analysts expect the 2024 core inflation projection to be revised 20bps higher to 3.0%, while 4 see a chance of the forecast remaining at 2.8%.
- The full suite of forecasts (at a quarterly frequency and including other macroeconomic variables of interest such as productivity and unit labour costs) will be released at 1445BST/1545CET (around the end of President Lagarde’s press conference).
- A reminder that the September projections will be put together by ECB staff, whereas the June set were completed by Eurosystem (i.e. national central bank) staff.
- Our full ECB preview is here.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USDCAD TECHS: Pierces The 50-Day EMA
- RES 4: 1.4048 High May 22 2020
- RES 3: 1.4000 Round number resistance
- RES 2: 1.3977 High Oct 13, 2022
- RES 1: 1.3856/3946 High Aug 6 / 5
- PRICE: 1.3729 @ 16:36 BST Aug 9
- SUP 1: 1.3731/18 50-day EMA / Intraday low
- SUP 2: 1.3657 Low Jul 17
- SUP 3: 1.3589 Low Jun 11 and a key support
- SUP 4: 1.3547 Low Apr 9
Trend conditions in USDCAD remain bullish and recent gains reinforce this theme. A key resistance at 1.3846, the Apr 16 high, has been cleared. This signals scope for 1.3977, the Oct 13 ‘22 high. Near-term, the pair has pulled back from Monday’s high. A move lower appears to be a correction and is allowing an overbought condition to unwind. The 50-day EMA, at 1.3731, has been pierced. A clear break would expose 1.3657, the Jul 17 low.
US TSYS: Curves Twist Flatter, Rate Cuts Cool As Recession Concerns Ease
- Treasuries are mostly firmer after the bell, curves flatter (2s10s -5.920 at -11.155) with the short end underperforming on a relatively quiet end to a hectic week with no scheduled data, Fed speak or Tsy supply Friday.
- Treasury futures spiked higher early in the week as recession concerns climbed following last Friday's employment data, 10Y futures surge to 115-03.5 high Monday, 10Y yield fall to 3.6653% low.
- Markets spent the rest of the week scaling back support as recession cares cooled.
- Tsy Sep'24 10Y futures currently trade +8 at 112-29, vs. 112-21, well below technical resistance at 114-03/115-03+ (High Aug 6 / 5 and the bull trigger).
- Projected rate cut pricing into year end were well off Monday's highs (*): Sep'24 cumulative -39.4bp (-54.3bp), Nov'24 cumulative -70.5bp (-95.9bp), Dec'24 -102.2bp (-128.1bp).
- Focus on next week's PPI, CPI, Retail Sales, Home sales data and UofM inflation expectations.
EURJPY TECHS: Outlook Remains Bearish
- RES 4: 167.44 50-day EMA
- RES 3: 164.75 20-day EMA
- RES 2: 162.89 High Aug 1
- RES 1: 161.59 High Aug 2
- PRICE: 160.03 @ 16:31 BST Aug 9
- SUP 1: 157.30 / 154.42 Low Aug 6 / 5
- SUP 2: 153.87 Low Dec 14 ‘23
- SUP 3: 153.23 Low Dec 7 ‘23 and a key support
- SUP 4: 151.42 Low Jul 28 ‘23
EURJPY traded sharply lower Monday marking an extension of the current impulsive bear cycle, before recovering from the session low. The move down opens the next key support at 153.23, the Dec 7 ‘23 low. A break of this price point would strengthen a bearish theme. Note that the cross remains in an extreme oversold position. A stronger recovery would allow this to unwind. Initial resistance is seen at 161.59, the Aug 2 high.
