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Federal Reserve Considering Ease to Rates | Loonie Weakens as Retail Sales Indicate Slowdown

Published March 25, 2019

• Following the inversion of the US yield curve on Friday, markets are now pricing a 90% chance that the Federal Reserve will cut rates by December of this year. Chicago Fed President Charles Evans spoke in Hong Kong this morning and stated that the Fed may have to ease rates if downside risks continue.
• Germany’s Ifo business sentiment opinion poll was published this morning, after weakness in the PMI version last week. The Ifo Institute’s March business climate index unpredictably rose, calming nerves after poor German manufacturing data.
• The Canadian dollar weakened against the greenback on as moves in the bond market and domestic retail sales data pointed to a slowdown in Canada’s economy. Domestic data showed that Canadian retail sales fell 0.3% in January marking the third consecutive decline.
• British Prime Minister May’s position could weaken substantially this week as members of Parliament are set to vote later today on whether to take control of the legislative agenda. This comes as the Prime Minister attempts to contain a rebellion within her cabinet. Market participants are taking a cautious approach to the pound, as GBPUSD continues to hold in the 1.30-1.33 range.