FOMC MINUTES, NORTH AMERICAN DATA IN THE SPOTLIGHT ON WEDNESDAY
Economic data is back in the spotlight Wednesday with North America taking centre stage. After a slow start to the week, the economic calendar will see a broad pick up in the coming days, which should give currency traders more opportunity to enter the market.
After an uneventful European session, the North American calendar will begin with a report on US mortgage applications courtesy of the Mortgage Bankers Association (MBA). Last week’s report showed a 2% drop in applications for the period ended 10 August.
At 12:30 GMT, attention shifts north of the border with Canada set to report on retail sales. Receipts at retail stores, which are a key proxy for inflation, are expected to rise 0.1% in June after surging 2% the previous month. Excluding automobiles, sales are likely to fall 0.1% following a 1.4% uptick in May.
The National Association of Realtors (NAR) will report on existing home sales at 14:00 GMT. The July report is expected to show month-on-month growth of 0.6% in July following a 0.6% drop the previous month. US home sales have taken a big hit this year, raising warning signs about the health of the domestic economy in light of multiple rate hikes by the Federal Reserve.
Energy traders will be keeping close tabs of weekly crude inventory data at 14:30 GMT. The US Energy Information Administration (EIA) is expected to show a weekly drawdown of 1.533 million barrels for the week ended 17 August. Inventories surged 6.805 million barrels during the previous week.
At 18:00 GMT, the Federal Reserve will release the minutes of its most recent policy meeting, where officials voted to keep the federal funds rate unchanged. The Federal Open Market Committee (FOMC) is widely expected to raise rates at its forthcoming meeting in September.
Europe’s common currency continued higher on Tuesday, hitting fresh 12-day highs against the dollar. The EUR/USD exchange rate now sits at 1.1574, where it was little changed compared with the previous close. The bulls are now eyeing the 1.1600 level as the next target.
The Canadian dollar held firm against its southern counterpart Tuesday, as oil prices resumed their upward traction. The USD/CAD exchange rate currently sits at 1.3040, having declined sharply from last week’s high. The pair is testing immediate support at 1.3035, which is the 100-DMA.
The USD/JPY exchange rate is coming off a volatile Tuesday session as prices fell, rose and then fell again before finishing slightly higher. At the time of writing, the USD/JPY exchange rate was holding at 110.21, where it was little changed. The pair is likely to run into immediate resistance near 110.52, the high from Tuesday.