Week Ahead: All eyes on the ECB

Week in review: This week US Q2 GDP growth was further revised up to 4.6%qoq annualised, a sign that the economy is bouncing back fast from the weather-related slump in Q1. This contrasts with the performance in the euro area, where the flash estimate of the composite PMI (business activity indicator), fell again to 53.2 in September, a nine-month low, pointing to a soft patch in the European recovery.

Week ahead: The most important event will be the ECB meeting on Thursday. Given the weakness in activity, persistently low inflation and the low take-up of the first targeted LTRO operation, the ECB will be under pressure to do more. Draghi may hint at purchasing Government Bonds in the secondary market, as the ECB’s plans to buy asset-backed securities may be hindered by liquidity issues in these markets.

29 September- European Commission Confidence: after the PMIs and the German Ifo, expect a small decline in the European Sentiment Indicator in September

3 October – US non-farm payrolls: the most closely watched data series for asseessing the state of the US economy should point to strong growth in employment