Eurozone: Next week key events - Danske Bank

Analysts from Danske Bank take a look into next week key economic events in the Eurozone, that include the European Central Bank (ECB) meeting on Thursday. 

Key Quotes: 

“In the euro area, the Sentix investor confidence figure is due for release on Monday. Sentix has climbed to levels not seen since 2007 with a figure of 27.4 in May. We expect Sentix to rise further to 28.1.”

“On Tuesday, euro area retail sales for April are due for release. We have seen three consecutive months with monthly increases in retail sales with the latest figure in March up 0.3% m/m. Consumer confidence rose in April and Easter is likely to have supported higher retail sales. We therefore expect retail sales to show another monthly increase of 0.3%.”

“Wednesday brings the German factory orders for April. We expect a decline in factory orders of about 0.7%. The figure rose 3.5% m/m in February and 1.0% in March, meaning the April figure is likely to see a decline after two months with increases.”

“The June ECB meeting will be held on Thursday. One of the main themes for observers is the forward guidance. While we expect a more hawkish tone in the post-meeting statement, we do not expect a change in the forward guidance. Some market participants expect the ‘or lower levels’ phrasing to be removed from the forward guidance on the policy rates. However, we do not believe the ECB will do so. If they did, they would risk an unwarranted tightening of financial conditions. Instead, the ECB could change its rhetoric regarding the growth outlook saying the risks to growth are largely balanced instead of ‘to the downside’. The ECB has expressed that ‘a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to build up’, meaning they should not want to risk an unwarranted tightening yet, as it is clear that underlying inflation pressure is still lacking.”

“Thursday also brings the German industrial production figure for April. As the factory orders for March saw a 1.0% monthly increase, and March industrial production reported a decline of 0.4% m/m, we expect monthly growth in industrial production of 0.9% in April.”