The Fed was in the spotlight yesterday but today, markets will have to quickly turn their attention to the ECB. Powell & co. did not explicitly call a pause to the tightening cycle but all else being equal, they are likely to move to the sidelines from next month onwards.
As for the ECB, their job isn't quite done yet and after the inflation data this week, policymakers are likely to err towards raising interest rates by another 25 bps today.
That is largely already priced into markets and so far there is no evident stress on European banks, so that is affording the ECB some extra room to work with. Adding to that, the economic resilience in Q1 - while not as good as anticipated - is at least not pressuring the central bank to pause, for now at least.
They might be wrong at every step of the way so far but when you shoot enough bullets, one of them is bound to hit the target - even if by luck.
Looking to European trading, all eyes will be on the dollar and whether or not the risk aversion from yesterday will extend. But it seems to be the case this week that we only start to get into the negative mood once Wall Street enters. As such, there might be some added calm before the ECB but keep an eye out on the bond market and the greenback in the meantime.
0600 GMT - Germany March trade balance
0715 GMT - Spain April services PMI
0745 GMT - Italy April services, composite PMI
0750 GMT - France April final services, composite PMI
0755 GMT - Germany April final services, composite PMI
0800 GMT - Eurozone April final services, composite PMI
0830 GMT - UK March mortgage approvals, credit data
0830 GMT - UK April final services, composite PMI
0900 GMT - Eurozone March PPI figures
1130 GMT - US April Challenger layoffs, job cuts
1215 GMT - ECB May monetary policy decision, statement
1245 GMT - ECB president Lagarde press conference
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
