Will the ECB Acknowledge the Slowdown in Growth? (page 2 of 2)

Inflation has picked up since then and UK economic data has been mixed, but the growing reluctance by mortgage lenders to extend new loans may force the Bank of England to take further steps to ease monetary policy. Co-operative Bank joined First Direct in withdrawing all 2 year mortgages. Halifax, the nation's largest mortgage lender is expected to follow suit in the coming weeks. Tighter credit conditions could put further pressure on the UK housing market which will lead to more losses and defaults. Aside from the BoE meeting, consumer confidence, industrial production and the UK trade balance will be released.

More Caution Expected from the Bank of Japan

The Bank of Japan will also be holding a monetary policy meeting, but with interest rates already at 0.5 percent, there is not much room for the central bank to move interest rates. Earlier this week, Japanese business confidence fell to a 4 year low. Although workers are benefitting from higher wages, companies are beginning to grow more pessimistic. We believe that the shift in the corporate sector due to the recent strength of the Japanese Yen should force the Bank of Japan to downgrade their economic outlook. A lot of Japanese data will be released next week including the Eco Watchers survey and the trade / current account balance.

AUD Bounces Back from Weaker Data, CAD Slips on Lower Employment Numbers

The commodity currencies are moving in opposite directions with the Australian and New Zealand dollars rising against the greenback and the Canadian dollar slipping. Australian retail sales dropped 0.1 percent last month, confirming the central bank's fear that high interest rates and slower US growth is dampening the Australian economy. However the currency managed to shrug off those numbers on the back of higher oil prices and weak US economic data. The Canadian dollar on the other hand did not fare as well as a higher unemployment rate, smaller increase in jobs and slower growth in the manufacturing sector hangs over the currency. In the week ahead, we are expecting the Australian trade balance, employment numbers and Canadian merchandise trade. There are no New Zealand economic releases which mean that the Australian and Canadian dollars will be in play.