Details from the ECB Bulletin and Expectations from UK MPC rate statement

UK’s Services PMI showed a rise to 57.2 in January from a 17-month low of 55.8 in December, beating forecasts of 56.6. This adds to data showing businesses enjoyed an unexpectedly strong start to the year, evident from the increase in hiring and rising new orders. U.S ADP Non-Farm Employment showed a change in Private sector employment increased by 213,000 jobs from December to January.

Australia Retail Sales m/m showed a change in the total value of sales at the retail level was at 0.2%. A disappointing release compared to 0.3% forecast, which sent the AUDUSD down about 30pips in the first few minutes of the release, but recovered quickly and is presently at an intraday high.

German Factory Orders m/m showed better than expected results, recording a 4.2% change in the total value of new purchase orders placed with manufacturers. Europe’s largest economy still looks well on pace of expansion. ECB Economic Bulletin was released at 9:00 am GMT. It was a comprehensive report which addressed activities in the Euro area financial markets. Short-term money market rates have declined to historic lows as a result of excess liquidity. Long-term interest rates also recorded new historic lows, reflecting weak growth momentum and subdued inflation, as well as market expectations of sovereign debt purchases by the Eurosystem. At the same time euro area stock prices have increased. The exchange rate of the euro has depreciated further, both in nominal effective terms and against the US dollar. Overall, the latest economic indicators and survey results remain consistent with a moderate economic expansion in the euro area in the short term, while the recent fall in oil prices should support growth in the longer term. Meanwhile, although labor markets have shown some further signs of improvement, unemployment remains high and unutilized capacity is expected to diminish only gradually.

UK’s Official Bank Rate is expected to stay at 0.5% as has been since 2009. Before now, there has been speculation that Mark Carney and Co. would be the first major central bank to tighten policy as a result of excessively low inflation and a dip in economic growth. This now seems unlikely as a rate hike is expected in 2016. Asset Purchase Facility which is the Quantitative Easing Program is also expected to remain at 375B.

Canada’s Trade Balance is estimated to show a -1.2B difference in value between imported and exported goods during the reported month.
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U.S Trade Balance is also estimated to show a deficit of -38.2B. In November, trade deficit fell to the lowest level in 11 months as deteriorating crude oil prices helped foster domestic demand. The US economy seems susceptible to the slowing global economy as exports fell by 1.00% in November. Unemployment Claims is forecast at 287k, an increase from last month’s 265k.

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