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Could weaker Eurozone retail sales extend euro losses?

business-articlesCould weaker Eurozone retail sales extend euro losses?
  • Eurozone retail sales slowdown to weigh on euro

  • Canadian dollar vulnerable to easing business confidence

  • US dollar volatility forecast on ISM non-manufacturing composite index


Euro vulnerable to softening Eurozone retail sales

A fresh bout of weakness could be in store for the euro this morning if November’s Eurozone retail sales weaken as forecast.
Markets expect to see sales growth ease from 0.3% to just 0.1% on the month, reflecting the general downturn in global retail.
This would add to the sense of bearishness provoked by Friday’s underwhelming consumer price index data, giving the European Central Bank (ECB) further incentive to remain on hold.
However, evidence of increased consumer confidence and spending could encourage the euro to recover some of its lost ground.

Business confidence decline to dent Canadian dollar

Demand for the Canadian dollar may decline once again on the back of December’s Ivey PMI reading, which is expected to show a softening on the month.
A decline in the PMI would indicate that business confidence within the Canadian economy deteriorated in the final month of 2018.
Given the relative weakness of other recent Canadian data a decline here could fuel worries over the outlook of the domestic economy, to the detriment of CAD exchange rates.
Even so, if oil prices continue to push higher this may limit the weakness of the commodity-correlated Canadian dollar.

Weaker non-composite index to weigh on US dollar

Further pressure could be in store for USD exchange rates this afternoon with the release of the latest ISM non-manufacturing composite index.
The index is forecast to show a modest slowdown on the month, easing from 60.7 to 59.4 in the face of weakening global growth momentum.
However, the negative impact on the US dollar could prove limited as long as the index remains firmly within a state of expansion.
If US data continues to surprise to the upside, though, the odds of greater Federal Reserve hawkishness are likely to pick up.

Upcoming Data:

Monday, 7th January 2019
10:00 EUR Eurozone Retail Sales
15:00 CAD Ivey PMI
15:00 USD ISM Non-Manufacturing Composite Index

Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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