Summary:

  • Important inflation, GDP and labour market readings for USD

  • Bank of Canada to make interest rate decision in the afternoon

  • US central bankers will discuss changes to Volcker Rule in the evening

Stock markets all around the world accounted heavy losses yesterday on the back of uncertainty spurring from Italian political turmoil. Yesterday’s calendar was almost empty therefore there was nothing that could stop the sell-off even for a moment. However, today is a different day. Calendar is flooded with reports from North America that may draw attention to USD and CAD. Moreover, in the evening (8:00 pm BST) US Federal Reserve Board will meet to discuss changes to the Volcker Rule.

1:15 pm BST – US, ADP Nonfarm Employment Change for May. The US labour market is constantly tightening what can be seen in the reports for past few years. The unemployment rate managed to decline below 4% after peaking at 10% in the post-financial crisis period. Today’s ADP reading may not be as closely watched as the NFP report but it is released couple days earlier and therefore may serve as some kind of a predictor. Market consensus points for a 189k increase against prior 204k. The NFP report will be released on Friday.

1:30 pm BST – US, GDP and PCE Inflation for Q1. The US economy does quite well given that the first quarter of 2014 was the last one when we could speak about recession. The economic growth in 2017 came slightly below 3%. Nevertheless given the size of the US economy it is superb pace. Economists surveyed by Bloomberg suggest that the GDP growth reached 2.3% YoY in first quarter of 2018. Simultaneously, a PCE inflation reading for Q1 is going to be released. Core PCE inflation is important measure of price growth as it is the one used by Fed to determine inflation target. Market consensus suggests that the inflation has reached its target in first quarter at 2.5% what may urge FOMC to rise rates four times this year.

3:00 pm BST – Canada, Interest Rate Decision. One month ago markets assessed the probability of interest rate hike at May’s meeting at 34%. Today it is just 15.7%. Having in mind that the latest readings from Canadian economy were not good enough to justify hike we should not expect fireworks at today’s meeting. Especially as it will not be followed by presser. However, investors will examine statement carefully to see whether attitude of central bankers has shifted or not.

9:30 pm BST – US, API Weekly Crude Oil Stocks. The rally on the oil market eased as of late. WTI retreated from $73 to $66.70, where a double top from the first quarter consolidation can be found. The latest surge was fueled by the geopolitics but it was so sharp that a correction would be justified. Today’s API reading may support market bears even further in case it shows a major build.

Central bank speakers scheduled for today:

3:45 pm BST – SNB’s Jordan

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After breaking from the consolidation range EURUSD is mercilessly smashing through technical and psychological support levels. How low could it go? Will today’s reports halt USD rally? Source: xStation5