ECB Mario Draghi 1200x627

ECB leaves the interest rates unchanged; better than expected retail sales readings from the UK and US

Jun 15 • Morning Roll Call • 354 Views • No Comments

On Thursday, investors were closely monitoring the European Central Bank’s decision regarding the interest rates, and as expected, they remained on hold, however bond-purchasing stimulus program wind up can be expected towards the end of the year. It is anticipated that the ECB will end the asset purchase program in December this year, and has assured that the interest rates will remain unchanged until at least the middle of 2019. What could be heard during the ECB press conference is that the Governing Council expects to keep the key ECB interest rates at the current levels throughout summer 2019 and as long as required so as to ensure that the inflation will remain aligned with the current expectations of a sustained adjustment path.

Yesterday we have also witnessed better than expected reading from the UK, where the retail sales rose 1.3% during last month, whereas the forecasted figure was just 0.5%. The better than expected results are assumed to be caused by the royal wedding and warm weather, and at the same time signaling an economic recovery after the sharp slowdown in the start of 2018, influencing the BoE decision to delay the interest rate hike. The fall in inflation and rising wages are expected to provide a relief to consumers who have faced an impact on their spending power last year that was caused mainly by the Brexit vote in 2016.

In addition, retail sales in the US rose for the 3rd time in a row in May, showing an optimism in the economic health and supporting the assumption of having more interest rate hikes by the end of this year. The retail sales reading came at 0.8%, while the expected was 0.4%. Core retail sales that exclude automobile sales, came at 0.9%, which is 0.4% higher than what was expected. Furthermore, the unemployment claims fell more than expected as well, where the number of people who field for unemployment assistance decreased by 218k, as opposed to the expected 223k.

ECONOMIC CALENDAR EVENTS FOR JUNE 15th

JPY Monetary Policy Statement
JPY BOJ Press Conference
EUR Final CPI y/y
CAD Foreign Securities Purchases
CAD Manufacturing Sales m/m
CAD Empire State Manufacturing Index
USD Capacity Utilization Rate
USD Industrial Production m/m
USD Prelim UoM Consumer Sentiment

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