European markets are trading near the flat line as the disheartening economic data released yesterday is still very much the main focus of traders. Our biggest concern is with Germany, which is the main driver of economic growth and the picture is not surely blooming as we march towards the end of this quarter. If the IFO business climate number does show a further weakness today, then it will be equivalent to fuelling the fire because the German ZEW data released this week was fragile already . The expectations are 110.3 which is a revised number to the downside as compared to the previous reading of 110.4.
You may ask if the measures announced by the central bank are actually going to have any impact on the euro region, as France is still the problem child. The evidence of this was seen in the economic numbers this week. But, surely it is too early to judge the central bank’s decision yet because it will take some time before we see the fruit of this decision, if any. However, the confidence level, which is the main target for the central bank when they announce any such decision has started to cripple among investors. Middle East’s tensions are also having their own impact on trader’s sentiment because such a rise in oil price is not a positive thing for the markets.
Back in the UK, traders are anxious to learn more about the sudden change in the tone by the Bank of England. Mark Carney, the governor of the bank of the England, has surprised many when he became the biggest hawk by announcing that the markets are underestimating the timing of interest rate hike. Investors are going to gauge his comments today when he will testify to the treasury select committee that why this sudden change of tone, and if the Central bank governor is still dependent on the incoming economic data for his future decisions.
Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader. by Naeem Aslam