FOMC SPEECHES IN THE HEADLINES ON TUESDAY
Monetary policy is back in focus on Tuesday as top central bankers from the US Federal Reserve and Bank of England deliver public commentary.
An absence of Eurozone data on Tuesday will shift the attention to the United Kingdom, where the British Bankers Association (BBA) is expected to report on monthly mortgage approvals. According to a median estimate of analysts, approvals are projected to rise to 38,200 in May compared with 38,049 the month before.
Two members of the Bank of England’s Monetary Policy Committee (MPC) are scheduled to deliver speeches in back-to-back sessions. MPC member Jonathan Haskel is first up at 09:00 GMT. Half an hour later, Ian McCafferty is scheduled to speak.
Federal Open Market Committee (FOMC) members Raphael Bostic and Robert Kaplan are scheduled to deliver public addresses at 14:00 GMT and 17:45 GMT, respectively.
Central bank speakers are closely watched by the financial markets for clues about the possible direction of monetary policy in the future. In the case of the Fed, interest rates are expected to rise at a quicker pace this year. Policymakers earlier this month voted in favour of raising the federal funds rate by 25 basis points. Two additional hikes are projected before the end of 2018.
In terms of economic data, S&P/Case-Shiller will deliver the monthly home price indices at 13:00 GMT. The report is expected to show 6.8% year-over-year growth in US home values during the month of April. Prices registered similar growth the month before.
At 14:00 GMT, the Federal Reserve Bank of Richmond will release the June edition of its manufacturing index. The headline reading is projected to show a reading of 15, down one point from May.
Commodity traders will also be keeping track of weekly crude oil inventory data courtesy of the American Petroleum Institute (API). The official inventory data is due the following morning.
Europe’s common currency extended its recovery in early week trading, as the dollar backtracked against a basket of currencies. EUR/USD added 80 pips Monday and currently sits at 1.1715. The pair is eyeing the 1.1720 resistance, followed by 1.1750.
Pound sterling was quick out of the gate Monday as it jumped more than 60 pips against the dollar. GBP/USD now sits at 1.3285, having gained another 0.1% in Asian trading. The pair is running up to an important hurdle at 1.3300. A rally north of that level would likely expose 1.3315, followed by 1.3370.
A receding dollar impacted USD/JPY negatively on Monday, as investors turned to risk-off mode in the wake of political risks involving the United States and China. USD/JPY is currently trading at 109.41. where it faces immediate support at 109.20. On the flipside, immediate resistance is located at 109.90.