Australian retail sales dive in December
Australian retail sales slumped by 3.9% in December after a busy November in which Aussies took advantage of early Christmas sale prices. The markets had expected a drop of 0.2% or thereabouts but the fact that they were expecting bad news meant the GBPAUD rate only trickled higher, rather than properly spiking. To be fair though, the pound is being held back by a report that the International Monetary fund thinks Britain’s economy will shrink in 2023. More of that below. For now, the GBPAUD rate sits at around AUD 1.7550.
GBP shrugs off IMF forecast
The International Monetary Fund, which, it must be said, doesn’t have a great track record of forecasting, have predicted the global economy will grow by 2.9% in 2023, a small increase from their previous prediction, but also predicted the UK would be the only G7 economy that actually contracted in the year. They foresee Great Britain’s economy shrinking by 0.6%. The markets have largely ignored the forecasts. Perhaps they are as impressed with the IMF’s forecasting capability as I am. For now, sterling traders are focussed on this morning’s debt data and the Bank of England’s interest rate decision , due on Thursday. The pound is down a tad against the strengthening USD. This pair starts Tuesday at $1.2315 and the GBPEUR rate is still orbiting around €1.1400.
Euro slips against USD ahead of central bank decisions
At their last meeting, the Bank of Canada stated that they were coming to the end of their interest rate hiking cycle and many believe that was the starting pistol for other central banks to follow suit. We will find out tomorrow whether the US Federal Reserve has become more dovish and we will find out whether the European Central Bank has followed suit on Thursday. Traders appear to be nervous about the ECB and a little more bullish on the Fed, as evidenced by weakness in the euro this morning and strength in the US dollar. The EURUSD rate has fallen roughly a cent from yesterday to this morning’s $1.0815. It will be very interesting to see if this is the start of a trend or just a pre-meeting risk reduction move. Other than some German inflation data, there is little to focus on in either the EU or US today.
