Today's economic calendar is relatively light, with the European and American sessions offering little in the way of high-impact data releases. However, there are a few key events that are worth keeping an eye on, particularly in the context of central bank speakers and the ongoing geopolitical landscape.
European Session
The European session is marked by a couple of low-tier releases, including the Italian final CPI and the German ZEW index. While these data points may not significantly impact the ECB's monetary policy decisions, they can still influence market sentiment and provide insights into the broader economic landscape. One thing that stands out is the potential for sentiment indices like the ZEW or PMIs to improve in the coming months. This is due to easing rate hike expectations and lower energy prices, which could lead to a more positive outlook for the eurozone economy.
American Session
In the American session, the US housing starts and building permits report is the only highlight. However, this data is not expected to be market-moving, and it is unlikely to change the Fed's monetary policy trajectory. The markets are currently focused on the positive effects of the US-Iran deal and the official end of the war. This has led to expectations of lower oil prices, which are easing inflation concerns and resulting in a dovish repricing of interest rates.
Central Bank Speakers
Three ECB officials will be speaking today: Escriva, Lane, and Sleijpen. While these speakers are neutral voters, their comments could still provide valuable insights into the ECB's thinking and the broader monetary policy landscape. It will be interesting to see how they address the current economic environment and the potential for further rate hikes.
Broader Implications
The question that remains is whether the negative supply shock caused by the US-Iran deal will turn into a positive demand shock. If economic activity strengthens significantly and inflationary pressure remains high, it could force the Fed to intervene with rate hikes. This is likely to be the next tail risk for markets, and it will be important to monitor how central banks respond to these developments.
Personal Perspective
In my opinion, the ongoing geopolitical landscape and the potential for central banks to intervene in the face of rising inflation are the key factors to watch today. While the economic calendar may not be packed with high-impact data, the comments from central bank speakers and the broader market sentiment could provide valuable insights into the future trajectory of interest rates and economic growth.
