CENTRAL BANK SPEAKERS HIGHLIGHT WEDNESDAY SESSION
Monetary policy is in the spotlight again on Wednesday as a parade of central bank chiefs take the microphone. Although no policy meetings are planned, central bank speakers are closely watched for clues about the future path of interest rates and quantitative easing.
The policy wire begins at the start of the North American session, giving traders on both sides of the Atlantic enough time to follow headlines. At 13:30 GMT, Bank of England (BOE) Governor Mark Carney, Bank of Japan (BOJ) Governor Haruhiko Kuroda, European Central Bank (ECB) President Mario Draghi and Bank of Canada (BOC) Governor Mark Carney are all scheduled to take part in a panel at the ECB Forum on Central Banking in Portugal.
All four central bankers are currently involved in a campaign of monetary easing to help their respective economies return to growth and inflation. For Poloz, lowering interest rates has been sufficient in stimulating the Canadian economy.
In the case of Japan, the United Kingdom and Eurozone, more drastic measures were needed following the subprime mortgage crisis. This included record quantitative easing in each jurisdiction. All three economies have shown signs of improvement as of late, but underlying risks are expected to keep monetary policy on hold for the foreseeable future.
In terms of economic data, Swiss business sentiment, Italian consumer inflation and Spanish retail sales will make headlines throughout the European session. In New York trade, market participants can expect U.S. trade, wholesale inventories and pending home sales.
Oil traders are also anticipating weekly inventory data from the US Energy Information Administration (EIA), which is due for release at 14:30 GMT. Oil prices have staged a large recovery in recent sessions, as the market rebounded from bearish levels.
Anyone doubting the impact of central bankers on the currency markets should look no further than the euro. The EUR/USD surged to fresh yearly highs on Tuesday following upbeat comments from ECB Governor Draghi. The pair is forging higher ground, and could be poised to test fresh ten-month highs in the short term.
Pound sterling took advantage of a slumping dollar on Tuesday, climbing to more than one-week highs. Cable was last seen trading above the 1.28 handle. By clawing above that psychological resistance, the GBP/USD is eyeing the 6 June low of 1.2870 as the next target. On the other side of the ledger, the 26 June high of 1.2755 offers immediate support.
Crude oil staged an impressive rally on Tuesday, as prices continued to bounce from bear market lows. At last check, WTI was in the process of reversing much of those gains. However, the short-term outlook remains favourable for continued upside as bargain hunters look to re-enter the market after the multi-week correction.