European markets are going to experience a low volatility day today given the US markets are closed for the Thanksgiving holiday. The bias amid investors remain towards the upside as the sentiment is sturdy that the ECB will trigger another stimulus package in a few days time. The euro had another depraved day yesterday on the back of this, but today it has bounced off from its lows. If we fall below the level of 1.05 level, the euro dollar parity babble will pick up once again and it is highly likely that during the next month we get even more close to this level.
However, it is momentous to remember that short bets are once again towards their all time high as traders are expecting more weakness. But, if you look at the economic data from the Eurozone, it is not that depraved, hence the president of the European bank could add another round of easing with very much dovish tone. If he does that, we could see a bounce back in the euro as it will signal a message which is over promised and under delivered. Remember the ECB’s promises are data dependent and if the economic data shows that there is no need for hawkish approach, it will be positive for the euro.
On the other side, Janet Yellen, the chairwoman for the Federal Reserve Bank is also expected to raise the rates during the next month. But, once again the similarity is that her tone will be very dovish despite the fact if they do increase the rate. The net outcome could be very positive for the euro, which is under hefty selling pressure and everyone wants to take one side bet only, which is towards the downside.
The geopolitical tensions remain very real, but yes, there is no doubt that they are not as delicate as they were a few days ago. Turkish and Russian economic relation is under focus and both sides are sticking to their guns and blaming each other for the recent event. The Turkish lira which has been battered throughout this year is once again under pressure and feeling the heat. Perhaps, the best option for both sides is to show a common front against their enemy and put aside their own agenda. Turkey has accepted a large number of refugees and this act has been widely encouraged by German Chancellor Angela Merkel. However, what also is imperative is not to forget that Russia is one of the biggest trading partner and taking a calm approach is the best option for them.
In terms of economic data news, the M3 money supply y/y data is due later this morning. The number came in at 4.9% and the forecast for today is same as well.