Key Trading News - 12.07

Key Trading News - 12.07

Summary:

  • FED’s Yellen is scheduled to testify to the Congress
  • BoC’s is expected to deliver an interest rate hike
  • UK’s jobs market should draw attention in early trading

There is no doubt that today’s macroeconomic calendar is full of many crucial events making Wednesday likely the most interesting day for traders this week. Before focus turns to Yellen as well as the BoC’s meeting we’ll get the UK’s jobs report which could be critical given the current state of the economy. Let us present a full tally of the most noteworthy releases planned for today.

9:30 am BST - UK’s jobs report: Nowadays, employment reports in economies such as US, Canada or UK have lost slightly its importance which they have tended to have on currency markets. Although, an employment change is not a big market mover anymore, focus has decisively turned to wages which has become the most important issue given current inflation trends across developed economies. On that account, traders will be scrutinizing the UK’s jobs report in a bid to see any signs of higher wage dynamics. If wages picked up massively, it could settle down concerns when it comes to stagflation risks as a slowdown in real wages would be lower. Bear in mind that inflation still exceeds wage growth eating into real figures. Consensuses point to 1.8% yoy and 1.9% yoy for 3mth average weekly earnings and 3mth weekly earnings ex bonuses. The jobless rate is expected to stay at 4.6%.

1:30 pm and 3:00 pm BST - Yellen’s appearance before the Congress: While chair Yellen is expected to deliver its testimony ahead of the Congress at 3:00 pm BST, headlines from that speech will be already unveiled at 1:30 pm BST. For that reason currency markets could respond to her remarks 90 minutes earlier than an official beginning of her hearings. Traders will have to read between the lines in order to pull out any concrete phrases pertaining to the future of the FED’s monetary policy. Let us remind that emphasis during the Q&A session could be put on a process of the balance sheet unwinding and its impact on financial markets.

3:00 pm BST - BoC’s interest rate decision and 4:15 pm BST - Poloz’s press conference: While majority of banks accord with themselves that the BoC will ultimately deliver a rate hike today, there are outliers which tend to have a contrary view. In that respect let us recall Goldman Sachs which claim that the BoC will refrain from hiking rates at the July’s meeting. Either way, a consensus is by far tilted to a rate increase scenario with the likelihood being close to 100%. Given massive anticipations risks with regard to trading on the CAD appear to be tilted to the downside.

3:30 pm BST - crude oil stocks by DoE: The API report took us by surprise revealing the largest oil stocks draw this year. Nonetheless, those figures have to be confirmed by the DoE’s report. If so, oil prices could continue their rebound which has been sparked following the splendid API’s numbers. An official consensus suggests a decline in inventories by 3.2m brl, however it has to be said that market can expect a slightly more draw. Hence, should there is a lower drop than 3.2m brl, it could be oil-negative after all.

7:00 pm BST - FED’s Beige Book and 7:15 pm BST - FED’s George speech: Although, most of attention will be drawn by Yellen’s speech it could be worth looking at the Beige Book as well. It rarely tends to exert a substantial impact on currencies, however it shows a broader view regarding the economy which, along with Yellen’s speech, could affect the greenback. At the end of the day, there will be FED’s George speech who might voice its view in terms of the balance sheet unwinding.

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