CENTRAL BANKS HEADLINE TUESDAY SESSION
Central banks are headlining a relatively subdued trading session on Tuesday, giving investors the latest clues about the future of monetary policy in regions as diverse as Australia, United Kingdom and United States.
The European data wire begins at 08:15 GMT with a report on Swiss consumer prices. The consumer price index (CPI) is forecast to rise 0.2% in February, which translates into a year-over-year gain of 0.5%.
Shifting gears to North America, the US Commerce Department will report on factory orders at 15:00 GMT. The report is expected to show a 1.3% drop in the headline figure.
Commodity traders will also look to a weekly inventory report from the American Petroleum Institute (API) for clues about the supply/demand balance of US commercial crude. The API report is a precursor to the official data courtesy of the Energy Information Administration (EIA). The EIA report is due Wednesday morning.
On the monetary policy front, speeches from Federal Reserve governors William Dudley and Lael Brainard will make headlines throughout the North American session. Bank of England (BOE) official Andrew Haldane and the Reserve Bank of Australia’s Philip Lowe are also scheduled to speak publicly Tuesday.
Earlier in the day, the RBA voted to keep interest rates at a record low of 1.5% in a decision that was widely forecast by the financial markets. The central bank is expected to remain on the sidelines for the foreseeable future in support of a stronger domestic economy.
Meanwhile, the Australian Bureau of Statistics reported a slower than expected rise in retail sales. Receipts at retail outlets edged up 0.1% in January after falling 0.5% the previous month. Analysts had forecast a 0.4% increase month-on-month.
Europe’s common currency has returned to form in recent sessions, with the EUR/USD exchange rate approaching multi-week highs. The pair has added roughly 250 pips since the beginning of March and is currently trading in the mid-1.2300 range. Key levels to watch include 1.2206, the low from 9 February, and 1.2401, the short-term resistance level.
Australia’s dollar picked up steam on Tuesday even as the economic data failed to inspire confidence in the local recovery. AUD/USD advanced 0.3% to 0.7784. The pair continues to trade in a familiar range following a multi-legged breakdown from highs near 0.8000 in mid-February.
Cable also pointed higher on Monday, as prices continued to claw back toward the mid-1.3800 region. At the time of writing, GBP/USD was trading at 1.3843, where it was little changed compared to the previous close. Sterling has gained traction in the wake of Theresa May’s acknowledgment that a Brexit transition deal was in the works. Brexit talks will continue to influence the British pound in the short term.