SMM News: some investors expect the European Central Bank to cut interest rates as early as July 24, and the euro is expected to weaken before the meeting. In addition, investors believe the Fed will cut interest rates on July 31, and markets are likely to question the Fed's rate cuts if US data remain strong this week. It is worth noting that on July 23, IMF will release the latest "World Economic Outlook", the market is expected to be as pessimistic as previous reports. That could provide some support for the ECB and the Fed to cut interest rates, depressing the dollar and the euro.
Some investors expect the Bank of Europe to cut interest rates as early as July 24, and the euro is expected to be weak before the meeting
On July 24, 19-45 Beijing time, the European Central Bank will announce the interest rate resolution; 20-30, the European Central Bank President Draghi will hold a press conference, the market is expected to hold on to every word of his speech.
Mr Draghi hinted last month that a new round of easing was coming out of action against stubbornly low inflation and a weak eurozone economy. Since then, the eurozone bond market has rebounded strongly.
Investors are betting heavily on the ECB to cut interest rates, possibly as early as this week, and to restart its bond-buying programme, or quantitative easing, later this year. If the ECB fails to cut interest rates in July, Mr Draghi's forward-looking guidance will be crucial: he is widely expected to add the word "or lower" to ECB forecasts, which are expected to maintain current interest rates until the summer of 2020.
Alexandrovich (Marchel Alexandrovich), senior European economist at Jefferies (Jefferies), said the ECB had been expected to come out of Taiwan more quantitative easing by the end of the year, perhaps ahead of schedule.
Foreign exchange traders have also set high standards for Mr Draghi, according to analysts at Nomura. "We think the euro will be weak ahead of the ECB meeting, but it is also more likely that the ECB will not cut interest rates this week, which will disappoint the markets," they wrote in the report. at that time, there may be a subconscious rebound in the euro. "
Even so, investors seem confident that the ECB will strike hard later this year. More than 60 per cent of fund managers expect more bond purchases by the end of the year, according to a survey by bank of America Merrill Lynch. This view is likely to continue to depress bond yields.
"I don't think Draghi will close the door to any action," Alexandrovich said. Whatever the outcome of the July meeting, more easing is on the way out.
The market expects the Federal Reserve to cut interest rates at the end of July, which will only be questioned if the data remain strong this week.
Investors remain confident that the Fed will cut interest rates on July 31. That belief was reinforced by dovish testimony from Federal Reserve Chairman Powell (Jay Powell) in Congress earlier this month. But if US economic data remain strong this week, some doubts may start to emerge. Us data to watch this week include Markit services and manufacturing PMI data, home sales, durable goods orders and first-time jobless claims. In addition, pay attention to the first forecast of overall US economic growth in the second quarter.
Us growth is likely to slow after unexpectedly optimistic first-quarter economic data, but another wave of strong data could bolder the Fed's hawks and force investors to reassess their views on the Fed's future interest rate cuts.
"if we cut interest rates now, if the US economy does slide and fall into recession, the Fed is at risk of losing its gunpowder," said (Chris Rupkey), chief financial economist at Mitsubishi UFJ. Consumers may ask the Fed not to cut interest rates, saying there is no need to cut rates now. "
The outlook for the global economy may not improve significantly
On July 23, Beijing time, the IMF will release its latest World Economic Outlook, providing clues about the state of the global economy. In April, the IMF made a pessimistic assessment of global growth.
In its previous report, the IMF highlighted the drag on global economic growth caused by international trade tensions and said monetary policy remained restrictive and lowered its economic forecasts for 2019 and 2020.
BlackRock (473.24,-1.90,-0.40 per cent) (BlackRock) analyst said: "Central banks are turning to monetary easing because their goal is to ease the global economic slowdown triggered by trade tensions. This policy shift should help prolong the cycle of economic growth. "
Three months ago, the IMF pinned its recovery hopes on a boost from "instability" in emerging markets, and the crisis in Argentina and Turkey is expected to end. Argentina's economy did improve, while Turkey emerged from three consecutive quarters of contraction in May.
With mixed news to digest, analysts do not expect a major change in the latest IMF report in July. Economists surveyed unanimously predicted that the global economy would grow by 3.3 per cent in 2019, in line with previous IMF forecasts.
Investors need to keep an eye on the continued pessimism of the IMF's global economic forecasts, which could increase the willingness of the European Central Bank and the Federal Reserve to cut interest rates, depressing the euro and the dollar, Huitong warned.
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