Manufacturing orders for July in Germany gained 0.5% against the forecast of 0.3% growth and in contrast to 1.6% fall in June. Ahead of Mario Draghi’s press conference, Spain and France placed their bonds quite successfully, much cheaper than during the previous auctions. The ECB left its interest rate unchanged at the level of 0.75% and revised the economy growth forecast to the downside to the range of -0.6% - -0.2%. As the result, the euro lost 65 points. After the following conference held by the head of the ECB, stock markets demonstrated a more significant rally than currencies. Draghi confirmed the plans on unlimited purchase of bonds, having said the ECB would block effectively any potentially undesired scenarios. Investors were not confused by the sterilization mechanism which suggests that the additional liquidity is left on bank’s balance sheet. Obviously, the market players are more interested in the euro’s speculative power rather than economic development and the ECB’s plan supported their optimism.
As the result, Dow Jones grew 1.87%, Stoxx600 accelerated 2.33%, Span 10-Y bonds yield fell from 6.45% to 6.03%.
In addition to the main events of yesterday, the US data was positive. According to ADP, the number of job positions increased to 201K against forecasted 142K taking into account that July data was revised from 163K to 173K. Nonmanufacturing PMI was up from 52.6 to 53.7.
Today we are waiting for encouraging statistics from the Eurozone and the USA>
At 14:00 (GNT +3) the markets will get data on manufacturing output from Germany for July. The indicator will demonstrate the reading of -0.9% against 0.1%.
At 16:30 nonfarm payrolls index is expected for August. The economists anticipate it to reach 121K in contrast to 163K in July. But as far as the growth in the private sector was the highest for the last 6 months, nonfarm payrolls should be above expectations as well.
Technically the price broke through the downward channel of October 37, 2011 and May 1, 2012 (thick red line on daily timeframe), it still should fix above the maximum of June 18 (1.2746). Targets for growth: 1.2672 and 1.2720.