Dean Popplewell | Dec 04, 2013 06:57AM ET
The grass is not always greener on the other side, even with Ireland being thrown into the mix. Persistently soft European data certainly opens the door for the ECB to be proactive once again, and perhaps even as early as at tomorrows ECB meeting. A plethora of Central Bank monetary decisions announcements will be dominating this week, at least until Friday's US non-farm payrolls. Late Monday, the RBA down-under did not deviate from their last meetings script, holding rates steady at +2.5%. Governor Stevens even took time out to continue to whine about their overvalued AUD. Today, the Bank of Canada gets to hog the limelight, albeit briefly, before investors have to once again square off with the "Old Lady" and the ECB tomorrow.
The Euro-zones service sector basically has put in a repeat performance to Monday's manufacturing PMI's. France and Italy have both come in weaker than expected, while Germany and a few of the peripheries, continue to surprise to the upside. With divergence appearing within the core (Germany and France) and the periphery (Spain and Italy) there is certainly room for Draghi and company at the ECB to follow up its rate cut last month with further easing tomorrow. Fixed income traders believer there remains a case for the ECB to deal with the decline in excess liquidity, which is starting to "increase volatility in money markets." There remain a number of innovative options open for ECB policy makers, ranging from cutting the reserve requirement to leaving the SMP program "partially or fully unsterilized." But, will Draghi and company have the gall to proceed as early as tomorrow?
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