BOC, ECONOMIC DATA ON DECK FOR WEDNESDAY
A combination of monetary policy and economic data will headline the Wednesday session, with the Bank of Canada (BOC) scheduled to deliver a rate verdict. On the data front, key reports from the Eurozone and United States will be the major focus for investors.
The European session begins at 07:45 GMT with a report on France’s trade balance. Paris is expected to report a trade deficit of €4.35 billion for January, up from €3.47 billion the month before.
At 10:00 GMT, the European Commission’s statistical agency will release revised fourth quarter GDP numbers. The 19-member euro area is forecast to grow 0.6% in October-December, which translates into an annualized gain of 2.7%.
The North American session begins with a high-profile jobs report courtesy of the ADP Research Institute. Private sector payrolls are projected to rise 195,000 in February, compared with 234,000 the month before.
ADP numbers are considered to be a fairly accurate precursor to the upcoming nonfarm payrolls data, which are due 48 hours later. On Friday, the Department of Labor is expected to show a gain of 200,000 nonfarm jobs last month. Unemployment is also expected to fall to 4% from 4.1%.
Just 15 minutes after the ADP report, the Department of Commerce will report on Washington’s trade balance for the month of January. The deficit is forecast to rise to $55.1 billion from $53.1 billion in December.
On the monetary policy front, a pair of Federal Reserve speakers will deliver speeches on Wednesday, including William Dudley and FOMC member Raphael Bostic.
North of the border, the Bank of Canada will deliver its latest verdict on interest rates at 15:00 GMT. BOC officials are widely expected to stand pat on monetary policy for the time being. Canada’s benchmark interest rate currently sits at 1.25%.
Europe’s common currency extended its winning streak on Tuesday, as the dollar continued to soften on news of trade tariffs. The EUR/USD exchange rate climbed back above 1.2400 for the first time in over two weeks, with current prices hovering around 1.2412. The pair is now eyeing the next major resistance test at 1.2480.
The USD/CAD came within a few pips of the all-important 1.3000 handle on Tuesday. Prices would later correct lower, eventually settling around 1.2924. The loonie on Wednesday will likely take its direction from the BOC, which could provide important clues about the path of monetary policy in its official statement.
The dollar’s rally against the yen was short-lived this week, with prices being rejected at the 106.00 level. The USD/JPY is now trading back in the mid-105.00 range. The pair will likely experience a more active second half of the week with Japanese GDP and US nonfarm payrolls data scheduled for release.