Financial market reaction will be based on on how much of this is built in to current pricing (if it is expected, then it is likely built in) and if there are any surprises and new announcements from ECB President Mario Draghi.
Interestingly, European equity markets are currently testing selling resistance at the down-trend line that began last April (the best levels since August's "melt-down"). A break to the upside in prices could extend the current positive move from the early October lows as buyers may then feel more comfortable.
Janet Yellen (US Federal Reserve Chairwoman) addresses the US Congress' Joint Economic Committee on Thursday. She will also speak to the Economic Club of Washington on Wednesday. Currently bond markets have priced in close to an 80% likelihood of the Fed raising rates in December.
Friday is Employment Data Day in the US and Canada and is always widely watched for the latest clues to the direction of the economy. Although we will pay closer attention to revisions to previous months data and wage inflation behind the scenes.
OPEC meets on Friday. This could in fact prove to be a pivotal meeting if those oil producing nations are at all interested in stabilizing oil prices.
In the meantime, tomorrow will bring the latest update on US manufacturing. In Canada we will see Q3 GDP data (although Q3 is well behind us).
We have brought up the "diverging monetary policy" issue before, but there are many implications for a continued and aggressively stimulative monetary policy in Europe while the Fed turns to a tighter monetary policy: most importantly it is the value of the $US. A weaker Euro is positive for the European export economy. On the flip side, a stronger $US becomes restrictive for the US economy.
US corporate profits have continued to slow and the fundamentals for future revenues and earnings become a greater drag on US equity prices if economic growth continues to struggle.
The global economy also continues to struggle as China and other developing economies are slowing. We won't see any significant data on China until next week, but the Trade data due on Dec. 7 will be widely watched for clues as to the state of the Chinese economy.
We shall expand on all of this at our weekly webinar tomorrow.
The recorded version will be available at