ECB President Trichet may keep interest rates at a record low and state there is no rush to exit emergency stimulus measures as the economy shows signs of recovery.

  • The ECB announces its rate decision at 11:45 GMT and Trichet will release the revised economic forecasts during a press conference 45 minutes later.  The bank is expected to raise its forecasts for economic growth today after Germany and France unexpectedly exited their recessions in the second quarter.
  • However, rising unemployment and the expiry of government rescue packages may damp expansion next year.  Therefore the ECB will be cautious of constricting the emerging euro-region recovery by tightening policy too soon.
  • The FOMC Minutes released yesterday for the meeting held in August, indicate that the Fed felt that the recession came to an end in August.  The Fed repeated a prediction that the economy would start growing again in the second half of this year and expected the pace of the recovery to pick up in 2010.
  • However, uncertainty on how consumers will behave resulted in a range of views from the Fed officials over the economic recovery.  In summary, they all agreed that the downturn in economic activity was ending and a turn around was just beginning.
  • Gold rallied 2.3% yesterday, the biggest gain since March 18, as decline in equities and the dollar helped push demand for the precious metal as an alternative investment.  To date this year gold rallied 11% while the US dollar declined 3.6%.

Currency to watch out for: EURUSD & GBPUSD

  • The EURUSD pivot point is at 1.4320 with a preference to enter into short positions at 1.4310
  • The GBPUSD pivot point is at 1.6325 with a preference to enter into short positions at 1.6315

Today's calendar and market movers:

  • EU Retail Sales month on month expected to rise to 0.2%
  • EU Minimum Bid Rate expected to remain unchanged at 1% with the Press Conference to follow 45 minutes later.
  • US Unemployment Claims expected to drop slightly to 563,000
  • US Non-Manufacturing PMI expected to rise to 48.3

Stocks:

  • US stocks ended down for a 4th straight day with the Dow and S&P lower by 0.3% and the NASDAQ down 0.1%.
  • Over in Asia, the markets are mixed with the Nikkei trading at -0.48% and the Hang Seng at 0.99% as of 06:00 GMT.