Daily Market Pulse
European Retail Sales Drop, Euro Weakens as Dollar Gains Ground
2 minute readIt’s rather light on the data front in the US so the focus is on Europe. Retail sales out of Europe declined by 1.1% in December. The USD is firm across the board this morning with eur/usd turning lower for the third straight day.
EUR/USD is attracting more selling on the day as spot continues to grind lower. Expectations that the ECB may start cutting rates in April along with the Fed holding rates longer are weighing on the pair. ECB policy maker Pablo Hernandez de Cos said today that the next move will be cutting interest rates amid growing confidence that inflation is coming back to the 2% target.
GBP/USD is down on the day and unable to hold gains that arose from upbeat S&P Global Services PMI data. BofE’s Pill is signaling that policy makers are discussing when the central bank could start reducing rates. The economy is on the brink of a technical recession.
USD/CAD is moving lower early in the session helped by firmer crude oil prices and softer US treasury yields. Later today the Canadian Ivey Purchasing Managers Index for January will be out which is estimated to soften to 55.0 from 56.3 in December.
USD/MXN is down early in the session due to weaker US yields. The upcoming presidential election on June 2nd is anticipated to result in Claudia Sheinbaum of the Morena party assuming victory. Market analysts foresee a gradual depreciation of the Mexican Peso due to anticipated uncertainties surrounding the economic policies of the incoming administration.
