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ECB to hold first meeting of the year, CAD likely to slide on retail data

business-articlesECB to hold first meeting of the year, CAD likely to slide on retail data
  • ECB’s January rate decision to dominate EUR movement
  • GBP may slip following UK retail report
  • Canadian retail sales expected to tumble
Markets hope for policy hints from ECB

The European Central Bank (ECB) will hold its first policy meeting of 2018 this afternoon and investors around the world will be watching closely for any hints of what the bank’s next move will be.

There has been considerable speculation this month that the ECB may be planning to tighten its monetary policy at a faster pace this year after the strong growth seen in the Eurozone in 2017.

Observers suggest the bank may speed up its stimulus tapering process in the coming months and could deliver a rate hike by the end of the year.

While officials looked to curb this speculation last week by stating that any policy alterations would likely come after the bank’s receives its latest economic assessments in March, markets will still be eager for any hints of what’s to come.

However this could put considerable pressure on the euro if the tone of the bank’s meeting appears to be more dovish in nature or policymakers adopt a ‘wait and see’ attitude.

Possible slowdown in retail activity may dent GBP

The Confederation of British Industry (CBI) will release its latest distributive trades Index this morning, with the pound likely to stumble if the index trends lower as expected.

The index is predicted to have fallen from 20 to 12 in January as British retailers experience a slowing of sales activity following the busy Christmas period.

There is a chance that the index could have slipped further than expected this month as the pressures of soaring inflation and weak wage growth continue to weigh on households, possibly prompting further purse tightening at the start of the year.

Downturn in retail sales likely to weaken CAD

The Canadian dollar may depreciate later today as Canada publishes its latest retail sales figures.

Economists currently forecast domestic sales growth will have slowed from 1.5% to 0.7% in November as sales normalise after a sharp rally in October.

However CAD investors may be pleasantly surprised if, as in other countries, the increasing prevalence of retailers offering major discounts in November and changing shopping habits prompt better than expected figures.

Upcoming Data

Thursday, 25 January, 2018
11:00                     GBP CBI Distributive Trades Index
12:45                     EUR ECB Rate Decision  
13:30                     CAD Retail Sales
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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