(MENAFN- DailyFX) In the days ahead, the market has a chance to refocus its attention on two of the major drivers of Euro weakness in 2015: persistently low inflation in the Euro-Zone; and the sustained improvement in the US labor market that is driving a wedge between ECB and Fed policy expectations. The data due between Tuesday and Friday have the chance to help markets re-anchor prices
Is the global inflation cycle turning? Perhaps not quite yet. Previously edging up from -0.6% y/y to -0.3% y/y in February, the price level in March is expected to retreat yet again, although at a slower pace of -0.1% y/y. However, according to a Bloomberg News survey, core CPI (excluding food and energy) is expected to remain constant at 0.7% y/y. Now in the third week of sovereign debt purchases, investors will likely use these readings to paint a broader picture of the economic state thanks to a weaker Euro and lower energy costs; while in the background, competing signals have emerged between Germany and Greece regarding the state of debt negotiations.
The Bank of Canada has forecast a +1.5% growth rate for Q1'15; analysts however remain skeptical. Previously at 2.8% y/y, the annual growth rate is expected to slow in January, as lower oil prices were not fully mitigated by a weaker Canadian dollar, nor did they parlay into greater spending on behalf of consumers. In fact,Canadian retail sales fell subject to a broad based decline in January, dropping by -1.7% m/m. Seemingly unfazed by a potential setback, the Bank of Canada expects activity to pick back up in the second half of the year. Only on a significant deviation (+/-0.2%) from the expected headline of +2.4% y/y would the Canadian Dollar see meaningful progress.
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