ECB Economic Forecast and Investors’ Expectations

Investors faced confusion about the European Central Bank (ECB) meeting. Will it end with confidence in the economic recovery or fearing for the coronavirus pandemic? 

Wednesday’s news that the ECB will express optimism about the recovery sent the common currency higher, but nothing can be taken for granted.

Christine Lagarde, President of the European Central Bank, will present new economic forecasts. The economies have coped with the coronavirus pandemic better than expected. However, the damage is significant, and the increase in cases continues to be worrying.

Are the Markets Ready for Disappointment?

There are expectations for Lagarde to address the exchange rate. Comments on the exchange rate are rare and tend to shake currencies even if the central bank does not plan direct intervention.

In general, markets are more optimistic than earlier this week, rebounding from the blow taken by the interruption of AstraZeneca’s phase 3 trial of its coronavirus vaccine. The British company stopped the extensive experiment after a patient fell ill.

Following the initial crash in stock markets and the rebound of the safe-haven US dollar, the trend has turned. Hope of the trial resuming next week encourages investors. As well as, by the progress made by other efforts. The EU obtained millions of immunization doses from Pfizer, which is also advanced in testing its vaccine.

President Donald Trump faced heavy criticism for downplaying the severity of COVID-19 earlier this year. His challenger Joe Biden took advantage of it, and he is ahead of Trump in the polls. The president receives higher marks in managing the economy. 

Recent upbeat NFP nonfarm payrolls boosted the dollar. They may also reduce Republicans’ sense of urgency to offer more aid. The update on the US labor market will be released on Thursday, with weekly jobless claims.

Brussels has considered bringing charges against London after the British government published a bill that violates the Withdrawal Agreement.

In general, the ECB is ready to shake the markets.