The ongoing loss of economic momentum in the eurozone is likely to provoke a response from the ECB, as President Lagarde noted that recent developments 'strengthen confidence' in a return to the inflation target in a 'timely manner.' This suggests that policymakers are preparing for a 25bp interest rate cut in October, reflecting a significant shift towards addressing economic stagnation.
Markets exhibited a calm before the storm yesterday, as participants remained passive ahead of a busy week filled with economic data, including eurozone inflation and US job openings. Despite this calm atmosphere, underlying economic issues, particularly in the eurozone, signal that a pivotal moment may be approaching, especially with the impending September US jobs report, which could significantly impact market sentiment.
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