Market movers today
In the US, we expect January core retail sales data to show a rebound from the disappointing sales pace in December. Consumers continue to benefit from a cocktail of positive factors: the drop in the oil price has boosted real spending power, the labour market continues to improve and interest rates remain historically low. Headline retail sales are likely to show a decline though, as lower gasoline prices continue to drag nominal sales lower. Data received so far do also suggest some weakness in auto sales in January but more importantly, we expect the core sales measure to show a healthy increase of 0.3% m/m, up from -0.4% m/m in December.
The Bank of England (BoE)'s quarterly Inflation Report is released today. We will in particular look for any comments on its view on wage growth. Wage growth has been increasing in recent months and how wage growth develops in the coming months will be a key factor for the MPC's decision on when to hike the Bank Rate for the first time, in our view. However, note that the MPC has become more dovish as the two hawks, Ian McCafferty and Martin Weale, are now in favour of keeping the Bank Rate unchanged. They had otherwise voted in favour of increasing the Bank Rate since the 14 August meeting.
Following the extraordinary Eurogroup meeting yesterday, EU leaders will hold a summit today to discuss both Greece and Russia. A second Eurogroup meeting is scheduled for next week and no concrete decisions are expected to be announced today.
We will also receive December euro-area industrial production data, which we expect to increase 0.2% m/m in line with consensus
Monetary policy in Denmark, Sweden and Norway in the spotlight.
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