US FOMC Minutes in Focus
In the US, speeches by a number of the Federal Reserve (Fed) officials and the FOMC minutes for the most recent policy meeting are likely to hog limelight in the latter half of today’s trading session. The latter will be eyed to especially ascertain if the publication supports the recent hawkish stance adopted by the Fed Chief Janet Yellen.
With no major economic releases in the UK scheduled today, investors will keenly await this week’s publications of retail sales and public finances data in order to gauge the health of UK economy. Also, a lack of macroeconomic triggers in the Euro zone are likely to keep common currency traders on the sidelines ahead of the accounts of the European Central Bank’s (ECB) monetary policy meeting later this week.
Pound Sterling – UK Markets
Yesterday, October’s report on consumer prices in the UK showed that inflation remained unchanged in negative territory for a second straight month, strengthening possibilities of a prolonged period of deflation and weakening the case of a rate rise in Britain. Other than a notable decline in fuel prices, a drop in costs of food & beverages and energy kept price growth in the UK under pressure last month. However, this came as no major surprise, especially after the Bank of England’s latest quarterly inflation update hinted that growth in consumer prices was unlikely to cross the 1% mark until the latter half of 2016.
Sterling is trading in a tight range against the greenback this morning, in the absence of any major macro triggers in the UK today. Later today, the US FOMC minutes is expected to keep traders in the Pound-US Dollar pair on their toes. Going forward, tomorrow’s retail sales numbers in the UK will be eyed to gauge the health of local expenditure for October, particularly with average wages growing well above the domestic inflation rate of late, and fueling prospects that this might give a boost to discretionary spending in Britain.
US Dollar – US Markets
The greenback remained range bound against the majors following the release of yesterday’s mixed US economic data. A survey showed that consumer price inflation in the US climbed in line with expectations for October, after remaining in deflationary territory for the previous two months. An increase in gasoline costs along with a rise in prices of few other commodities poised the nation’s inflation last month, fueling anticipations that an impact of a stronger US Dollar and lower oil prices on consumer prices had started to fade. Meanwhile, another print for October showed that US industrial production declined for a third straight month, as an ongoing slump in oil prices dampened drilling activity and a warmer than usual winter weighed on electricity demand.
Today, the minutes of the most recent US Fed’s policy meeting is likely to attract significant attention among the greenback investors, particularly after Janet Yellen hinted about prospects of raising borrowing costs in the US by the end of this year. The publication will be eyed to gauge if contents back the hawkish stance adopted by the Fed Chief and if any strong arguments support the view to maintain US interest rates steady.
Euro – European Markets
In the absence of any major economic data in the Euro zone, the common currency is trading on a firmer footing against its key peers this morning. Across the Atlantic, the US FOMC minutes for the most recent policy meeting is likely to keep traders in the Euro-US Dollar pair interested in the latter half of the trading session. Moving forward, the minutes of the ECB’s most recent policy meeting is expected to generate considerable attention in the week ahead, especially after key central bank officials have continued to hint that the current stimulus package might be widened. Furthermore, market participants will keep a tab on the preliminary reading of Euro zone’s consumer confidence for November and the ECB President’s speech slated later this week for further direction to risk appetite.
Yesterday, the Euro remained under pressure against the Pound following the release of the downbeat Euro zone ZEW economic sentiment survey for November. The print showed that morale amongst investors in the Euro bloc deteriorated unexpectedly for November, despite anticipations of wider monetary easing measures in the region.
Other Currencies – Highlights
The Japanese Yen is trading on a stronger footing against the US Dollar ahead of a slew of economic releases in Japan scheduled later in the day. Traders will keep a tab on the nation’s trade data which is anticipated to show a wider trade deficit for October. On an annual basis, exports are anticipated to fall, while imports are expected to decline at a slower pace, during the month. Separately, tomorrow’s Bank of Japan’s interest rate decision immediately followed by the monetary policy statement by Haruhiko Kuroda will gather significant market attention.
Yesterday, the US Dollar was trading in a tight range against the Japanese Yen. Data in the US showed that consumer price inflation rose in line with market expectations for October, but the industrial production unexpectedly declined for October.