Draghi to duplicate dovish discourse
We saw a choppy end to last week and we can expect further volatility this week as the markets struggle to get a clearer view of where the majors are heading. Wednesday’s Fed meeting on monetary policy will be the key event. There will no changes to the rate policy but the rhetoric of the statement will set the tone regarding the Dollar’s performance for the next month. The markets will also be keen to see what hints, if any, there are as to the pace of future rate hikes this year.
GBPUSD was the surprise of the day on Friday as after a number of days against the ropes the Pound pushed above 1.4250. This was due to Sterling overlooking the bearish Retail Sales report figures that printed even worse than expected as warm, wet weather deterred footfall on the high street and reduced the need for new warm clothing.
Public Sector Net Borrowing for November printed at £6.871 billion, far lower than the expected £10.350 billion and added confidence to George Osborne’s borrowing forecast in his Autumn Statement. The British Retail Consortium has also announced that over October and December more global mobile users have been searching for British brands.
The European Central Bank’s (ECB) President Draghi’s speech and IFO Business Confidence report are the only two important events for the day as the rest of the economic calendar is relatively empty. Much of the focus will likely be on the Euro. The expectation for both the speech and Business Confidence report is bearish hence we should keep an eye on the Euro for more price action.
Data to watch: 3.30pm US Dallas Fed Manufacturing Business Index. 6pm Mario Draghi’s Speech.