Intensity persists: ECB, FOMC, G-20 and Greek referendum in focus

Having left a week behind that was seen as crucial for the future of the Eurozone we are now smack bang in the middle of another that is incredibly important for sustaining risk-on sentiment, at least until year end. In this macro view video with Steen Jakobsen, Chief Economist, Saxo Bank, we take a look at the expectations for three key meetings: the Federal Open Market Committee, the European Central Bank and the Group of 20 leaders. He also addresses the implications of Greece’s referendum on its aid package and austerity programme.

The G-20 meeting (November 3-4) needs to deliver actions rather than more supportive talk for the troubled Eurozone, says Steen. Focus will be on the announcement of concrete financial measures of commitment via the International Monetary Fund in order to appease the prevailing uncertainty.
This uncertainty was exacerbated by Greece’s call for a referendum on its new aid package and austerity measures, thereby possibly threatening European leaders’ attempts last week to secure the Eurozone’s future.

Prior to G-20 the Federal Open Market Committee meets. Despite a spate of moderately encouraging US data of late the committee is expected to merely confirm a supportive wait and see approach and possibly only allude to a third round of Quantitative Easing, says Steen.

The European Central Bank meeting, also this week, which is the first to be chaired by the new President Mario Draghi will be interesting to watch to see if he already now cuts rates and thereby reverses the apparent error of his predecessor.

Being Italian and with much focus on his troubled homeland, there is an expectation that Draghi will be even tougher on ensuring that Italy shapes up, particularly considering a disappointing bond auction last week which indicates the increasing problem Italy has in financing its debt.

For more comments by Steen Jakobsen see his blog Steen's Chronicle on TradingFloor.com