It’s relatively quiet day on the economic front today, but we have started with a basket of PMI Surveys for France, Germany & The Euro-Zone. The consensus across the board seems to suggest a decline in performance through the Manufacturing and Services sector, which right now may not be a major concern, but certainly as the year goes on this could pose a particular problem if this decline was to continue and worsen.
We also see PMI Surveys for The UK and The US later today, with a pretty mixed review. Either way none of these releases should have that much of an impact on the currency rates today.
The main talking point for today is no doubt The Bank of Canada’s latest Interest Rate decision. Anticipations suggest the central bank will keep their rates unchanged at their current 22-year high of 5%, mainly due to the stubborn inflation they are currently grappling with. Decembers figures saw prices rise unexpectedly by 3.4%, almost batting away calls for any early mention of Interest Rate cuts. If anything, The BoC governor Tiff Macklem emphasized the need for the Central Bank to reinstate their readiness to increase the bank rate if necessary. Longer term inflation expectations have thankfully remained fairly low, however as Decembers figures show, short-medium term expectations have escalated slightly. As ever, the forward guidance after the decision will be what impacts the currency rates more than anything.
We then have the interest rate decision tomorrow from The European Central Bank, which again is expected to stay unchanged. And as ever, following the BoC, the press conference after will be of huge importance especially with President Christine Legarde seemingly intent on holding rates at 4.5% until at least the summer of 2024.
