Weekly Market Outlook 2018-11-19

Economic data for the week ahead is expected to remain quiet for the most part. The ECB’s meeting minutes will stand out amid the Central Bank heading into the final leg of its QE purchases.

Economic data from the Eurozone will cover the flash PMI estimates across the manufacturing and the services sector.

The Reserve Bank of Australia will be releasing its meeting minutes this week as well. The RBA had held interest rates unchanged at its previous meeting and the minutes are not expected to surprise the markets.

Data from the United States and the United Kingdom are relatively quiet. A rather busy Friday for the Canadian dollar will see the release of the retail sales and inflation report.

Here’s a quick recap of the leading economic events due this week.

ECB Meeting minutes

The European Central Bank will be releasing its monetary policy meeting minutes this week. The minutes cover the policy meeting held in October. The central bank announced that it would be cutting its QE purchases to 15 billion Euro. The bond purchases, which are the final leg of the ECB’s massive bond purchase program are slated to end in December this year.

The Central Bank, at its meeting, announced that it would also keep interest rates unchanged until the middle of next year. The minutes will reveal insights into the policy makers deliberations and also highlight any risks and concerns they might have. This could give investors an insight into the potential risks that can come which could derail the monetary policy.

The ECB’s meeting minutes comes at a time when the Eurozone’s economic forecasts have been slashed, both by the European Union and the International Monetary Fund. At the meeting, the Central Bank also signaled domestic risks such as Italy’s budget deficit.

External risks cited included President Trump’s trade policies which are already seeing sentiment turning weaker. Amid the dangers, the meeting minutes will be crucial ahead of the December monetary policy where the ECB will be announcing an end to its QE program.

Canada retail sales and inflation data

A busy week is in store for Canada. The Canadian economic calendar is busy on Friday which will see the release of the retail sales as well as various measures of inflation.

Canada’s retail sales slipped 0.1% while core retail sales slipped 0.4% on the month previously. The decline in retail sales for August also missed estimates. This was the second consecutive decline in retail sales. Growth in the retail sale sector turned weak since the summer pause. Back then, nearly 11 subsectors posted a decline marking 52% overall decline as a result.

Fuel sales also fell sharply in August.

Inflation data will also be coming out this week. The consumer prices in Canada have been firmly entrenched above the Bank of Canada’s 2.0% inflation target.

However, in September, consumer price index rose 2.2%. This was the lowest in four months following a decline from 2.8% on an annual basis in August.

Inflation tumbled amid a sharp decline in prices in the travel industry.

The core CPI which measures inflation that excludes food and energy prices were seen rising 2.0% which was also weaker than expected.

The Central Bank had hiked interest rates at its previous meeting in late October despite the decline in inflation. The Central Bank noted that further rate hikes would be necessary for the coming months. The boost to the interest rates came amid the U.S. and Canada including Mexico concluded the trade deal which was previously seen as a significant headwind to interest rate hikes.