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Equities and euro higher ahead of ECB update

Equity markets in Europe are broadly higher this morning as traders await the European Central Bank (ECB) interest rate decision and press conference at 12.45pm and 1.30pm respectively.  

The press conference will be the focus of trader’s attention as they are expecting no change to the current policy.

Traders will be listening out for clues as to what the ECB are going to do in relation to the stimulus package, and whether the size of it will be reduced in the coming months. Mario Draghi, the ECB chief, would like to keep the euro as weak as possible, and I suspect he will use the relatively low inflation rate in the eurozone as an excuse for not reigning in the loose monetary policy as soon as some traders predict.

Mr Draghi will tread a fine line between acknowledging the need to lower the size of the bond buying scheme down the line, while also highlighting that inflation isn’t high enough and unemployment is still too high.

Bovis Homes posted a decline in profits and a drop in the number of completions for the first-half of the year. The company had some difficulty lately, but the turnaround plans that were announced today were well received by investors. The home builder will reduce building costs, trim the headcount and focus a few core regions. The share price hit its highest level in over two years today and bullish moment is increasing.

The EUR/USD is edging higher in advance of the ECB meeting and press conference later today. Any indication the ECB is looking to trim their stimulus package might drive the single currency higher.

The GBP/USD is higher this morning on the back of solid British housing data. UK house price grew at a faster pace than expected according to the Halifax survey. The report showed an increase of 1.1% in August, while the consensus was for a 0.2% rise. The July growth rate was revised to 0.7% from 0.4%.

We are expecting the Dow Jones to open 42 points lower at 21,765, and we are calling the S&P 500 down 4 points at 2461.

Dell Technologies will announce their second-quarter figures today.  


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