Outlook in the forex markets are generally unchanged as the weekly close is approaching. European majors stay bullish against dollar and yen in spite of the intra-week pull back. Even the Aussie is holding on to near term support of 0.8927 against the greenback and maintains mild bullish outlook. The bigger mover was found in the Canadian dollar, which is so far the weakest currency this week. And, the USD/CAD's break of 1.1089 minor resistance yesterday indicates completion of recent pull back and we'd possibly see a test on 1.1223 soon. In particular, Canada will release retail sales and consumer inflation today and the Loonie is vulnerable to another selloff in case of downside surprises.
The Organization for Economic Cooperation and Development warned that "the global economy's momentum remains sluggish, heightening concerns that there has been a structural downshift in growth rates compared with pre-crisis levels." The OECD said in a report that "weak global demand, pressures from budgetary consolidation and remaining dysfunctions in financial markets are exerting a drag on trade, investment and job creation." And, "the crisis has dented potential growth of many advanced economies, while some emerging economies are running into bottlenecks.” Also, it noted that "a return to healthy and sustainable growth calls for ambitious and comprehensive structural reforms."
The minutes of January BoJ meeting released today noted that "Japan's economy has continued to recover moderately, and a front-loaded increase in demand prior to the consumption tax hike has recently been observed." But, many members noted developments in "emerging and commodity-exporting economies" are facing "structural problems such as current account deficits" and "continued to warrant attention together with developments in the global financial markets." Growth forecast for 2013 fiscal year was left unchanged at 2.7% but growth projection for 2014 fiscal year was revised down to 1.4%, from 1.5%. Excluding the impact of sales tax hike, core CPI is projected to be at 1.3% in fiscal 2014, 1.9% in fiscal 2015, unchanged from prior projections.
Looking ahead, UK retail sales is expected to drop -0.9% mom in January while public sector net borrowing is expected to fall GBP -9.3b. Canadian retail sales is expected to fall -0.5% mom in December with ex-auto sales down -0.1%. CPI is expected to climb to 1.3% yoy in January with core CPI unchanged at 1.3% yoy. US existing home sales is expected to droop to 4.75m in January.