CENTRAL BANK SPEECHES IN THE SPOTLIGHT ON TUESDAY
A mixture of economic data and monetary policy will drive the financial markets on Tuesday, giving investors plenty of factors to consider in implementing their daily portfolios.
The day begins at 07:00 GMT with a report on German consumer confidence courtesy of GfK. The consumer confidence index is expected to register 10.8 in December after hitting 10.7 the previous month.
Developments out of the United Kingdom will also make headlines Tuesday, beginning with the Bank of England’s Bank Street Stress Test results. At the same time, the BOE will unveil its latest Financial Stability Report, which provides an outlook on the banking sector’s stability and resilience in the face of adverse risks.
At 07:30 GMT, BOE Governor Mark Carney will deliver a speech that will be closely scrutinized by the financial markets. The Bank’s Monetary Policy Committee (MPC) voted to raise interest rates at its most recent meeting in an effort to keep inflation under control.
Shifting gears to North America, reports on the US goods trade balance and home values will make headlines through the early morning session. The Federal Reserve Bank of Richmond will also unveil its latest manufacturing index for the month of November.
The US policy wire will be highly active on Tuesday, with central bank members William Dudley, Patrick Harker and Jerome Powell scheduled to give remarks. Powell was recently chosen by President Donald Trump to head the all-powerful Fed once Janet Yellen’s term expires in February.
North of the border, the Bank of Canada (BOC) will release its Financial System Review, which provides a detailed breakdown of financial sector developments. Central bank governor Stephen Poloz will deliver a speech at 16:15 GMT.
The US dollar index posted modest gains at the start of the week, and was last seen trading steady at 92.91. The dollar index is weighed against a basket of six currencies, including the euro, pound, franc, yen, Swedish krona and Canadian dollar.
The euro pivoted sharply lower on Monday, with prices falling back toward 1.1900 US. The EUR/USD remains well supported, although gains north of 1.2000 are proving difficult. The 1.1875 level continues to offer strong support.
Cable touched a session high of 1.3377 before giving back most of its gains later in the day. GBP/USD remains well supported north of 1.3300, with the bulls eyeing a sustained rally north of 1.3350 for confirmation of further upside.
The US dollar shot up against its northern rival on Monday as oil prices struggled to resume their upward pace. The USD/CAD exchange rate was last seen trading at 1.2761 following an 80-pip rally at the start of the week. The gain pushed the pair outside of a fairly established trading range, leaving room for further upside in the short run.