Dhara Ranasinghe gives us a look at what lies ahead for the markets.

It is not difficult to believe that the European Central Bank will confirm on Thursday it has ended years of stimulative measures and will raise interest rates to limit record-high inflation.

Is it possible to continue? Not quite. The inflation rate is 8.1%, and the spread of the problem is increasing. Christine Lagarde, chief of the ECB, will speak carefully to get a feel for 1) the size and willingness to lift rates in July.

Pay attention to what the ECB has to say about the level of assistance it is willing to offer to weaker countries as their borrowing costs increase.

In the meantime, pricing in money market suggests that traders consider the probability of a move by the ECB at 50 bps to be increasingly probable in the months ahead.

Despite the positive outlook for growth, central banks across the globe are planning to increase their rates. Australia increased its rates by 50bps more than was expected earlier this week.

The ECB is moving towards negative territory with its key depo rates, which have been held at -0.50% over time.

Graphic: Markets bet ECB will hike interest rates fast – https://graphics.reuters.com/EUROZONE-MARKETS/zdpxowdowvx/chart.png

The world market is still nervous about rising rates. Asia stocks are down, while European and U.S equity futures are up.

The positive news that China provides has not helped to stabilize sentiment. In May data showed China’s Exports rose at 16.9% in double-digits, breaking all expectations and providing an encouraging sign for China’s second largest economy.

In currencies, the yen dropped to its lowest level in twenty years against the dollar. The Bank of Japan committing to an extremely loose monetary policy, and its peers raising rates quickly, means that the widening gap in interest rates continues to be borne by the yen.

These are the key developments expected to give more direction for markets Thursday

IMF said that the recent fall in the yen is a reflection of fundamentals

RICS: UK’s housing market signs of slowdown

Federal Reserve Issues Quarterly Financial Accounts of the United States

Tiff Macklem, Governor of the Bank of Canada speaks

ECB Press Conference at 1230 GMT

Meet with the National Bank of Serbia and Central Reserve Bank of Peru

U.S. first jobless claims

Auction of U.S. 30 Year Bonds