Colombia’s retail sales in October were 10%, which is lower than the expected 12%. This indicates that consumers are spending less, which could impact the area’s economic growth. The recent figures give us a glimpse into how consumers are behaving and might affect future monetary policy choices. Retail sales play a crucial role in understanding consumer confidence and spending trends.

Market Insights

The FXStreet Team is closely monitoring these changes, as they provide valuable information for market players. The disappointing retail sales figures could signal potential economic slowdowns and may influence market sentiment. As the market digests this data, upcoming economic indicators and policy announcements will be watched closely for future trends. The surprising 10% retail sales from October 2025 hinted at a weakening economy. Recently released industrial production figures for November showed a 0.8% decline, confirming that the slowdown extends beyond retail sales. This trend indicates that both consumer and business activities are weakening faster than expected.

Speculation on Interest Rate Cuts

The current economic challenges have sparked speculation that the Banco de la República may lower its benchmark interest rate in the first quarter of 2026. However, with November’s inflation remaining high at 7.7%, significantly above the 3% target, the bank faces a tough decision. The tension between slowing growth and ongoing inflation will likely drive volatility in the market. Given these circumstances, we expect the Colombian Peso to weaken further. Traders might want to consider purchasing call options on the USD/COP pair to benefit from a rising dollar against the peso. Historically, during the 2017 easing cycle, the peso dropped over 5% in the months following the first rate cut, which serves as a relevant model for the current situation. The outlook for the MSCI Colcap stock index is more uncertain, making options strategies appealing. The economic slowdown poses challenges for company profits, but any hint of interest rate cuts could significantly benefit stocks. Traders might use straddles on index futures to prepare for substantial movements in either direction, without committing to a specific outcome of the central bank’s decision. Create your live VT Markets account and start trading now.

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