BOC HEADLINES ACTIVE WEDNESDAY SESSION
Economic data and monetary policy are on the agenda for Wednesday, with the Bank of Canada (BOC) scheduled to deliver a highly anticipated rate decision in Ottawa.
The BOC will make its policy intentions known at 14:00 GMT. Canada’s central bank wowed investors by raising interest rates in back-to-back meetings – something completely unheard of in the era of quantitative easing and negative interest rates. Although the BOC is expected to raise rates again this year, policymakers will probably stand pat on Wednesday following the recent batch of inflation and retail sales data.
In terms of economic data, action begins six hours earlier in Germany with the IFO business climate indicator. The monthly release provides a snapshot of business sentiment for Europe’s largest economy.
At the same time, Italy will report on industrial production for the month of August while Switzerland will see the latest ZEW Survey for October.
At 08:30 GMT, the United Kingdom will release its latest batch of Q3 GDP data. The post-Brexit economy is finally beginning to slow, although surging inflation will likely compel the Bank of England (BOE) to raise interest rates soon.
Four hours later, the US Department of Commerce will report on durable goods orders for the month of September. The report is expected to show a monthly gain of 1%, following a brisk 2% rally the previous month.
About 90 minutes later, Commerce will report on new home sales for the month of September.
Earlier in the day, the Australian Bureau of Statistics (ABS) said consumer inflation rose 0.6% in the third quarter, but weakened to 1.8% annually. The Reserve Bank of Australia’s Trimmed Mean CPI, which is essentially a measure of core inflation, was unchanged at 1.8% year-over-year. Analysts had expected core inflation to jump to 2% in the July-September period.
The Australian dollar took a beating after the CPI report, falling to the lowest level in over three months. The AUD/USD exchange rate is down 0.8% at 0.7717. the pair has been on a gradual downward path for the better part of a month after failing to extend gains north of the psychological 0.8000 level. The AUD/USD is likely to face immediate support at 0.7700. The outlook remains firmly to the downside as the US dollar reasserts control.
A recent string of disappointing data releases has left the Canadian dollar reeling. The USD/CAD is fast approaching 1.2700, a level it has not seen since August. The market is bullish, as the greenback continues to claw back heavy losses incurred through the summer.
The euro held steady on Tuesday even as the dollar rose against other major currencies. The EUR/USD exchange rate remains stuck in a range between 1.1700 and 1.1800. This will likely continue, unless US data surprise to the upside on Wednesday.