MARKETS LOOK TO FOMC MINUTES FOR DIRECTION
Monetary policy is back in focus on Wednesday, with the Federal Reserve scheduled to release the minutes of last month’s rate meeting. A deluge of economic data on both sides of the Atlantic will also drive market activity.
The economic data wire begins at 08:00 GMT with Italian gross domestic product (GDP). The Eurozone’s third largest economy expanded 0.4% in the second quarter and 1.4% annually, based on a median estimate of analysts.
A half hour later, the UK Office for National Statistics will release its latest batch of employment data for the months of June and July. The ILO-calculated unemployment rate for the three months prior to June will be presented. July claimant count data will also be made available.
The biggest data release of the session takes place at 09:00 GMT when the European Commission’s statistics branch reports on second quarter GDP. The euro area economy is forecast to grow 0.6% in the second quarter, confirming an earlier estimate.
The North American session features several notable releases, beginning at 12:30 GMT with monthly data on housing starts and building permits. Starts are forecast to climb 0.5% in July to a seasonally adjusted annual pace of 1.22 million units. Building permits, a proxy for future construction plans, are forecast to fall 2% to a 1.25 million-unit pace.
Energy traders will also be keeping an eye on the weekly crude inventory report from the US Energy Information Administration (EIA) at 14:30.
At 18:00 GMT, the US central bank will release the minutes of the July Federal Open Market Committee (FOMC) policy meeting. Although the Fed kept rates on hold last month, policymakers likely deliberated about how to wind down their $4.5 trillion balance sheet. Those discussions will be presented in the official transcript on Wednesday.
The euro’s gradual downtrend continued on Tuesday, with prices briefly falling below 1.1700. The EUR/USD faces a critical support line at 1.1688, according to the analysts at Commerzbank. A fall below that key level could expose the pair to heavier losses. On the upside, firm resistance is seen at the August high near 1.1910.
The British pound declined sharply on Tuesday, as the dollar rebounded against a basket of world currencies. After a 100-pip decline, the GBP/USD exchange rate is trading near seven-week lows, with immediate support located at 1.2830. On the opposite side of the ledger, resistance is likely found at 1.2910.
Crude prices rebounded on Wednesday, but remained under selling pressure following a series of volatile moves. US crude futures for September delivery were trading below $48.00 a barrel during Asian trade. The daily technical indicators remain bearish, with immediate resistance seen just above the $48.00 region.