Brexit might be the favourite child of the media these days, but there’s plenty more on the horizon that could cause significant volatility for the currency markets in 2018. So, what catalysts for exchange rate shifts should you be aware of?
- Italian industrial production expected to tick higher
- USD predicted to dip following inflation figures
- US retail sales forecast to slide
The euro may be able to build on Thursday’s gains later this morning with the release of Italy’s latest industrial production figures.
The figures are expected to show that factory output in Europe’s third largest economy rose from 0.5% to 0.6% in November.
This would be in line with the broader rise in production seen across the Eurozone in November, with the bloc’s overall reading yesterday revealing that output leapt by 1%.
However, given the fickle nature of industrial production readings, the data could just as easily lead to a shock contraction, which may dent EUR.
US inflation predicted to slide
The US dollar may face considerable pressure later this afternoon as the US publishes its latest CPI figures.
Economists forecast the data will show US inflation dipped slightly from 2.2% to 2.1% in December.
This is likely to support recent calls from some Federal Reserve policymakers that the US central bank should consider slowing the pace of its monetary tightening.
Atlanta Fed President Raphael Bostic said on Monday that plans to raise interest rates three times in 2018 may be too much.
The stubbornly low rate of inflation in the US has been a frequent source of concern for the Fed in recent months, with the latest uptick in employment and growth suggesting inflationary pressure should be stronger that it currently is.
Analysts expect US retail sales to tumble
USD may find itself under even more pressure today as the US will also release its latest retail sales figures, with analysts predicting sales growth will have slumped from 0.8% to 0.4% in December.
Observers forecast retail sales will have cooled slightly last month after the flurry of activity in November as US consumers rushed out to take advantage of the Black Friday sales.
The drop would also be a major fall back from the same point in 2016 when retail sales jumped 1.1%.
Nevertheless, some economists remain a little more upbeat as they suggest weekly indicators point to a more robust reading than currently forecast, with sales in the week leading up to Christmas notable stronger in 2017 than the year before.
Friday, 12 January, 2018
09:00 EUR Italian Industrial Production
13:30 USD CPI
13:30 USD Retail Sales
Joining the corporate trading desk in 2007, Phil now overseas 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 FSA approval and has completed the Certificate in International Treasury Management (CertiTM)