FX Week Ahead: US Retail Sales; Canada Inflation; BOE & Fed Rate Decisions; Australia Jobs

03/16 TUESDAY | 12:30 GMT | USD RETAIL SALES (FEB)

Consumption is the most important part of the US economy, generating around 70% of the headline GDP figure. The best monthly insight we have into consumption trends in the US might arguably be the ‘retail sales advance’ report. According to a Bloomberg News survey, after the surge at the start of the year, consumption appears to have taken a setback in the second month of 2021. Headline US retail sales is expected to contract by -0.5% m/m from the gain of +5.3% (m/m) in January.

Even if the retail sales report drags down US growth estimates for 1Q’21 (per the Atlanta Fed GDPNow and NY Fed Nowcast growth trackers), it may be looked past now that the Biden stimulus plan has been passed into law and most American consumers are in the process of receiving stimulus checks.

03/17 WEDNESDAY | 12:30 GMT | CAD INFLATION RATE (CPI) (FEB)

The FebruaryCanada inflation rate (CPI) report will be released on Wednesday, and according to a Bloomberg News survey, upside pressure is starting to appear in price pressures. The headline inflation rate is due in at +1.3% from +1%(y/y) in January, while core inflation is due in sharply higher, at +2% from +1.6% (y/y).

Following the impressive February Canada jobs report which saw the unemployment rate plummet from 9.4% in January to 8.2% in February, there are substantial evidence that the Canadian economy is gathering pace heading into the ‘base effect’ area around the start of the pandemic in 2020, which will likely curate an economic environment pressuring the Bank of Canada to reconsider its aggressive stimulus efforts. In turn, higher inflation figures may help the Loonie continue its bull run.

IG CLIENT SENTIMENT INDEX: USD/CAD RATE FORECAST (MARCH 12, 2021) (CHART 1)

FX Week Ahead - Top 5 Events: US Retail Sales; Canada Inflation; BOE & Fed Rate Decisions; Australia Jobs

USD/CAD: Retail trader data shows 78.61% of traders are net-long with the ratio of traders long to short at 3.67 to 1. The number of traders net-long is 12.93% higher than yesterday and 18.55% higher from last week, while the number of traders net-short is 38.30% lower than yesterday and 22.83% lower from last week.

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