Markets await US CPI after upbeat AUS data


14 April, AtoZForex, Lagos –Disappointing reports from the US yesterday, as the retail sales figures and the producer price index data fell below expectation. The core retail sales which excludes automobile sales came at 0.2%, while the aggregate retail sales figure showed a -0.3% change in the total value of sales at the retail level. The unexpected fall raises concerns that the consumer spending is losing momentum. This is evidence of a tepid economic condition in the first quarter of the year as the US economy experienced the largest drop in demand for autos in a year, alongside cutbacks at clothing stores, Internet merchants and restaurants.

As broadly expected, the Bank of Canada (BOC) opted to maintain its overnight rate at 0.5%, having held rates at this level since July, 2015, after cutting twice last year to stimulate growth. The USDCAD rebounded briefly yesterday after falling throughout the week so far. However, the bearish trend still seems alive, hence, we expect a downwards continuation soon.

The day has commenced with positive employment data from Australia, therefore sending the Aussie higher. Further more, on the calendar, we have the US CPI and the UK rate decision for the month.

UK Official Bank Rate (11:00 A.M GMT)

UK policy makers are likely to unanimously vote to maintain Official Bank Rate at 0.5%, while also maintaining the stock of purchased assets financed by the issuance of central bank reserves at £375 billion. As the bank has in recent time shown that this is the best policy stance to meet the 2% inflation target and in a way that helps to sustain growth and employment.

US consumer price index (CPI) (12:30 P.M GMT)

After the disappointing retail sales and producer price index data yesterday, attention is will now be on the US CPI due today, as analysts seek to access the level of inflation in the economy. After the mixed reports so far point to tepid economic conditions in the first quarter of the year. The CPI is forecast to show an improvement from last month to 0.2%, while the core CPI is forecast at 0.2% as well. Still far below the Fed target of 2%.

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