INFLATION AND MONETARY POLICY HEADLINE MID-WEEK SESSION
Economic data and monetary policy are in the headlines Wednesday, putting currency traders on high alert for big moves in the market.
The European session begins at 08:00 GMT with a report on Italian industrial sales. The Eurozone’s third-largest economy reported industrial sales growth of 9.8% year-over-year in February.
Shifting gears to the United Kingdom, the Office for National Statistics will release a spate of inflation data at 08:30 GMT. This will include the retail price index, producer price index and consumer price index for the month of March.
UK consumer prices are forecast to rise 2.7% annually, unchanged from the previous month. So-called core consumer prices, which exclude volatile items such as food and energy, are projected to climb 2.5% annually.
At 09:00 GMT, the European Commission will release the March consumer price index for the 19-member euro area. Consumer inflation is forecast to rise 1.4% annually in March, unchanged from the previous month.
The Bank of Canada (BOC) will headline the North American session with a policy statement at 14:00 GMT. While officials are widely expected to hold off on raising interest rates, the official statement could provide clues about the future of monetary policy. BOC Governor Stephen Poloz is scheduled to hold a press conference at the time of the rate decision.
South of the border, a pair of Federal Reserve officials will deliver speeches on Wednesday. At 19:15 GMT, New York Fed Bank President William Dudley will deliver remarks. One hour later, Fed Governor Randall Quarles is scheduled to speak.
Oil traders will be keeping a close watch on weekly crude inventory data courtesy of the US Energy Information Administration (EIA). EIA stockpiles are forecast to fall 1.9 million barrels in the week ended 13 April. Crude inventories jumped by 3.3 million barrels the week before.
Europe’s common currency reversed sharply on Tuesday after failing to hold above 1.2400 US. EUR/USD plunged from a high of 1.2413 to a low of 1.2346. It was last seen trading at 1.2371, where it finds itself in a familiar range. Immediate support is located at 1.2335.
Cable also made a decisive break lower on Tuesday, falling below 1.4300 US. GBP/USD touched an intraday high of 1.4367 before falling 80 pips. It was last seen trading just below 1.4300. Investors can expect big moves for the pound should Wednesday’s inflation data deviate from the consensus forecast.
USD/CAD is coming off a volatile session on Tuesday, with prices fluctuating between 1.2527 and 1.2577. The pair was last seen trading near the session highs with attention shifting to the BOC. Canadian monetary policy is now seen trailing the Federal Reserve in terms of hawkishness, which could mean renewed weakness for the loonie.