UK INFLATION REPORT HEARINGS HIGHLIGHT SLOW DAY IN FINANCE
The United Kingdom’s Inflation Report Hearings headline a slow day in the global financial markets on Wednesday, giving investors more time to dissect quarterly earnings and geopolitical developments from around the world.
The UK’s Treasury Committee will examine expenditure, administration and policy at the upcoming Inflation Report Hearings, which are scheduled to begin at 10:00 GMT. Inflation is a highly contentious topic following Brexit, with the Bank of England (BOE) signaling its preparedness to overshoot its price target in support of faster economic growth.
Just last week, the BOE’s Monetary Policy Committee kept interest rates at rock bottom in a 6-2 vote.
Elsewhere in Europe, Greece is scheduled to report on consumer inflation on Wednesday. Italy also plans to release its latest industrial production figures and Portugal will also report on global trade and unemployment.
Shifting gears to North America, Statistics Canada will release its latest report on housing starts and building permits. Starts are forecast to decline in year-over-year terms. Permits – a bellwether of future construction plans – are also forecast to drop.
In terms of US data, the Commerce Department will release wholesale inventories for the month of June. Oil traders will also monitor the weekly crude inventory report courtesy of the US Energy Information Administration (EIA).
Chinese economic data also made headlines on Wednesday after the National Bureau of Statistics reported on inflation. China’s consumer price index (CPI) rose 1.4% annually in July, compared with 1.5% the previous month. The producer price index (PPI) rose 5.5% annually, unchanged from the previous month.
The British pound has declined sharply over the past four sessions, as investors reduced their bullish bets following the Bank of England’s policy decision. The GBP/USD exchange rate fell below 1.3000 in overnight trading. With the pair breaking the critical 1.3000 support, further volatility may be in store. Immediate support is located at 1.2965. Resistance is found just up ahead a t 1.3005.
After soaring to multiyear highs last month, the Canadian dollar has been on a slow, steady decline. The USD/CAD is currently trading at three-week highs and appears poised to continue higher in the short term. Immediate resistance sits at 1.2714. On the opposite side of the ledger, support is located at 1.2622. The USD/CAD was last up 0.2% at 1.2688.
Crude prices continued lower on Tuesday in choppy trading as Saudi Arabia lowered its September crude supplies. However, investors continue to await news on Libya and Venezuela – two OPEC members that hold considerable sway over the market’s short-term supply/demand imbalance. At the time of writing, US West Texas Intermediate (WTI) futures were down 0.3%. Prices remain firmly capped below the psychological $50 barrier.