Pound (GBP) Undermined by Shock Contraction in Retail Sales
The Pound (GBP) closed last week’s session on a sour note after UK retail sales came in well below expectations in December.
The Office for National Statistics (ONS) reported sales growth contracted 0.6% last month, missing forecasts it would expand by 0.5%.
The abysmal sales figures reinforced expectations of a rate cut from the Bank of England this month, with CME’s BoE Watch Tool placing the probability of a January cut at over 70%.
Looking to the week ahead, these odds may climb even higher with the publication of the UK’s labour report as economists predict wage growth slowed in November.
Euro (EUR) Struggles amid US-EU Trade Worries
The Euro (EUR) struggled to find support on Friday amid a renewed focused on US-EU trade tensions.
This came in the wake of comments from Phil Hogan, the new European Commissioner for Trade, who appeared critical of US trade policy in a speech in Washington.
Turning to this week, the main catalyst of movement in EUR exchange rates looks to be the European Central Bank’s (ECB) first policy meeting of 2020.
No policy changes are expected from the bank this month, but EUR investors will be paying close attention to any hints regarding the ECB’s upcoming strategic review, particularly in reference to a possible change to the bank’s inflation targets.
US Dollar (USD) Buoyed Despite Weak Industrial Data
The US Dollar (USD) edged higher at the end of last week as some risk aversion helped to bolster the appeal of the safe-haven currency.
However, these gains were capped later in the session as the US published its industrial production figures, revealing a sharper-than-expected contraction in factory output last month.
In the absence of any major US data releases this week, we may see USD investors turn their attention to politics where Trump’s impeachment trial will be the centre of attention.
Canadian Dollar (CAD) Underpinned by Modest Uptick in Oil Prices
The Canadian Dollar (CAD) enjoyed some limited support on Friday, with the commodity-linked currency strengthening in line with a modest uptick in oil prices.
Coming up this week, the highlight for CAD investors will be the Bank of Canada’s (BoC) latest rate decision. No policy changes are expected this month but some dovish forward guidance from the BoC could weigh on the ‘Loonie’.
Australian Dollar (AUD) Gains in Risk-On Trade
After slumping on Friday, the Australian Dollar (AUD) is off to a stronger start this week, with investors turning bullish towards the ‘Aussie’ amid improved risk sentiment.
New Zealand Dollar (NZD) Buoyed by Improved Risk Appetite
Movement in the New Zealand Dollar (NZD) is currently mirroring that of the Australian Dollar, with the currency slipping at the end of last week’ session before rallying earlier this morning in risk-on trade.