FED, ECB SPEAKERS IN THE SPOTLIGHT
Monetary policy is back on the agenda Wednesday, as investors get to hear from top officials at the European Central Bank (ECB) and the US Federal Reserve. Both central banks issued their policy verdicts last week, helping to ignite a large decline in the euro and broad gains for the US dollar. Although Wednesday’s speeches won’t have the same impact, they could still provide clues about the future evolution of monetary policy on both sides of the Atlantic.
Kicking off the policy circuit is the ECB’s Sabine Lautenschlager, who is scheduled to speak at 08:00 GMT. ECB Executive Board member Benoit Coeure will also deliver public remarks at the central bank’s weeklong summit in Portugal. At 13:30 GMT, central bank president Mario Draghi will be in the headlines.
In the United States, Fed Chairman Jerome Powell is scheduled to deliver a speech at 13:30 GMT. Powell, who took over from Janet Yellen in February, has already hiked interest rates on two occasions as head of the all-powerful Fed.
Bank of Japan (BOJ) Governor Haruhiko Kuroda and Philip Lowe of the Reserve Bank of Australia (RBA) are also scheduled to speak publicly on Tuesday.
In terms of economic data, Germany will release the monthly producer price index (PPI) at 06:00 GMT.
Shifting gears to North America, the National Association of Realtors (NAR) will report on existing home sales at 14:00 GMT. The sale of previously-owned homes is forecast to rise 1.5% in May to a seasonally adjusted annual rate of 5.52 million units.
In other news, the Swiss National Bank (SNB) will issue its Quarterly Bulletin at 13:00 GMT. Since 1983, the Bulletin has provided insights on monetary policy, business cycle trends and the broader economy.
Europe’s common currency experienced yet another breakdown on Tuesday, as prices once again approached their year-to-date lows. EUR/USD bottomed at 1.1545, where it was down roughly 100 pips from the intraday high. The pair is now trading at 1.1577, where it was down slightly from the previous close. Immediate support is located at 1.1510.
Cable resumed its downtrend Tuesday, as prices reached their lowest level in about seven months as the prospect of a Brexit deal began to fade. GBP/USD fell from a high above 1.3270 all the way back down to 1.3162. After falling below 1.3200, cable now faces immediate support at 1.3135. A breakdown below this level will likely expose 1.3100.
The Australian dollar also headed for losses as the greenback continued to assert its dominance on the currency markets. AUD/USD bottomed near 0.7350 on Tuesday and has since recovered to around 0.7381. The pair faces immediate support at the 0.7333 handle, which reflects the swing low from May of last year.