The CAC index is showing little movement in the Wednesday session. Currently, the index is down 0.07% and is trading at 5264.00. ECB President Mario Draghi will address the ECB Forum of Central Bankers. Will Draghi perform an encore and push the euro even higher? On Thursday, the US will publish Final GDP.
The markets continue to keep an eye on Sintra, Portugal, which is hosting the ECB Forum. On Tuesday, Mario Draghi was upbeat about economic conditions in the eurozone, and the euro responded with sharp gains, although the CAC lost ground. Draghi acknowledged that economic indicators continued to point to a broadening recovery in the eurozone, but pointed to inflation as the barrier to tightening policy. Draghi defended the bank’s loose accommodative policy, saying that it had pushed inflation higher, but stimulus was needed until inflation becomes “durable and self-sustaining”.
The election of Emmanuel Macron as president has revived morale in the country, as the young and charismatic Macron appears determined to bring major changes to France. This sense of optimism was underscored by the latest INSEE consumer confidence report, which jumped to 108 points in the June report, up from 103 in May. This marked the highest level since 2007. Although consumers are in a good mood, this optimism has so far not translated into stronger consumer spending, but nevertheless is another sign that the French economy is improving. INSEE has revised upwards its Estimate for France’s GDP for the first quarter to 0.5%, up from 0.4% earlier in June.
Investors are anxiously awaiting a key report card for the US economy, with the release of Final GDP on Thursday. Preliminary GDP, which was released in May, came in at 1.2%, and this is the same estimate for the upcoming GDP report. Recent economic data has been softer than expected, notably construction and manufacturing reports. US durable goods releases were weak in May. Core Durable Goods broke a streak of two straight declines, but the weak gain of 0.1% missed expectations. Durable Goods declined 1.1%, its sharpest decline since June 2016. The slowdown in orders of business equipment could weigh on second quarter growth. Last week, it was the turn of construction numbers to disappoint, as Housing Starts and Building Permits both missed expectations. Consumer spending has also been softer than expected, and if Final GDP falls short of the modest estimate of 1.2%, the dollar could respond with losses.
Caught Flat Footed
Wednesday (June 28)
- 4:00 Eurozone Private Loans. Estimate 2.5%. Actual 2.6%
- 4:00 Eurozone M3 Money Supply. Estimate 5.0%. Actual 5.0%
- 9:30 ECB President Mario Draghi Speaks
Thursday (June 29)
- 8:30 US Final GDP. Estimate 1.2%
*All release times are EDT
*Key events are in bold
CAC, Tuesday, June 27 at 7:55 EDT
Open: 5231.00 High: 5275.50 Low: 5204.30 Close: 5264.00
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