Today the European Central Bank is having a regular policy meeting. At this time investors do not expect that the ECB will change the interest rates, which have been at 0.00% even before the coronavirus pandemic began. However, there are hopes that the ECB will announce an expansion of its asset purchasing program in order to provide further stimulus for the European economy. The predicted expansion is about 500 billion euro; if the ECB fails to announce any such measures, the euro could slump.
Meanwhile, Germany is moving ahead with its own stimulus plans, approving 130 billion euro to spend on its own economy. The money will mainly target the car-making sector, which is one of the pillars of European industrial production.
In the United States we expect this week’s initial jobless claims report. After several weeks of numbers over 2 million, higher than the forecasts, this week the markets are hoping that the reading will be under 2 million for the first time since the pandemic reached the US. Together with the continued jobless claims, these reports provide a crucial overview of the US labor market.
The protests in the United States are still going on, though they have turned less violent in the past few days. US President Donald Trump drew more criticism after he said he would like to send combat troops to disperse the protesters. The President’s popularity, already low to begin with, has been declining further based on his response to the protests. He has said surprisingly little regarding the demands by protesters for justice.
Today oil prices are on the downturn due to issues internal to OPEC+. It became known that Iraq has not been abiding by the production cuts previously agreed. The country is now facing pressure from Saudi Arabia and Russia to comply.
Moreover, OPEC+ reportedly plans to keep the cuts in place for just one more month against the three months the markets expected. As a result, the Brent crude dropped to $38.51, while the WTI reached $36.72 per barrel.
