As we expected, services PMI in the Eurozone was below the forecasts: 47.2 against 47.5. Amid the overall statistics, the euro was falling down until the ECB announcement about its intention to perform bond purchase program without limitations (which reminds of the Fed plans to buy securities without any restrictions). To prevent inflation, the CB will sterilize the excessive liquidity by taking it back to the deposits or withdraw from commerce.
Thus, at 15:45 (GMT +3), the ECB will decide on the key interest rate and will report about intervention program. But before this they will release Eurozone GDP for the second quarter. It should lose 0.2% according to the forecasts. At 14:00 German manufacturing orders will be disclosed: the indicator will gain unrevised 0.3% against 1.7% fall in June. If the data is below the forecasts, it will strengthen investors’ appetite to bond’s purchase which will lead to refusal to sterilize money supply (which should be used for real sector development and other measures of support) as well as reduction of margin requirements on refinancing operations, cut in the key interest rate from 0.75% to 0.5%. In the mid-term, purchase of Spanish and Italian bonds may not be implemented as these countries must first ask for bailout officially from the EU. But they are not hurry to do it. In its turn, the EU is talking about shrinking of government expenditures and sovereign cut as well.
At 16:30 (GMT +3) we are waiting for Mario Draghi’s conference. Investors hope that the last two weeks were fruitful as any of the ECB representatives visited Jackson Hole conference. Thus, they are waiting for some unusual decisions.
Technically, the first target for growth is the point of trend lines crossing on daily chart at 1.2670. Further, the resistance at 4H chart at 1.2706 is expected. The next target is 1.2740 (high of June 20).