ECB Press Conference defines EUR fate

22 October,, Lagos – Unsurprisingly, the Bank of Canada held rates at 0.5 percent. Having mentioned in the September policy meeting statement that the fall in CAD is: “Helping to absorb some of the impact of lower commodity prices and facilitating the adjustments taking place in Canada’s economy.” The policy makers gave no hint on any further cuts to come in the near term.

The BOC reported that Inflation has evolved in line with the outlook in the bank’s July Monetary Policy Report (MPR). Total CPI inflation remains near the bottom of the bank’s target range, owing to declines in consumer energy prices. Core inflation is close to 2 percent as the transitory effects of the past depreciation of the Canadian dollar are roughly offsetting disinflationary pressures from economic slack, which has increased this year.

Read also: Profiting from Post-BoC

Canada’s economy has rebounded, as projected in July. In non-resource sectors, the looked-for signs of strength are more evident. Supported by the stimulative effects of previous monetary policy actions and past depreciation of the Canadian dollar. The Bank projects real GDP will grow just over 1 percent in 2015, before firming to about 2 per cent in 2016 and 2 1/2 per cent in 2017. The CAD fell sharply across board after the release, loosing about 170 pips against USD throughout the day.

BOE Gov Carney’s speech

The emphasis of the speech was on Britain’s EU membership. According to the BOE Gov. Carney, the UK’s financial stability could be threatened by closer eurozone integration. Unless, the UK secures safeguards from Brussels that would protect the interests of non-members.

UK Retail Sales (8:30 A.M GMT)

The change in the total value of inflation-adjusted sales at the retail level is forecasted to come at 0.3%. This is potentially the best release since May. Continuing a sustained period of year-on-year growth, the volume of retail sales in August 2015 increased. The amount spent in the retail industry increased by 0.2% in August 2015, compared with August 2014. Yet, it decreased by 0.3% compared with July 2015.

ECB Press Conference (12:30 P.M GMT)

The ECB is under increased market pressure to go for another boost to monetary policy, either by ramping-up the existing quantitative easing programme or cutting the deposit rate even further into negative territory.

Read also: BNPP Trading dovish ECB

Inflation remains well below target and the council will reinforce that its commitment to take action if necessary. However, there appears to be little justification for any early move or promise of a move by the central bank. The conference today will be another market mover as traders await Draghi’s appraisal and way-forward on the area’s economy.

Other news on the calendar:

  • 12:30 P.M GMT- Canada Core Retail Sales m/m
  • 12:30 P.M GMT- US unemployment claims

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