FOMC MINUTES HEADLINE ACTIVE WEDNESDAY SESSION
A deluge of economic data will make its way through the financial markets on Wednesday, giving investors the latest performance measures of the European and US economies.
Action begins in Europe at 05:30 GMT with a report on French unemployment. France’s unemployment rate is forecast to decline slightly to 8.8% in the first quarter from 8.9% in Q4.
Over the next several hours, IHS Markit will release the latest in Eurozone PMI, covering manufacturing and services for Germany, France and the broader currency block. The Eurozone composite index, which measures services and manufacturing output, is forecast to decline by 0.1 point for May to 55.0.
Inflation data will headline the UK’s economic calendar on Wednesday, with National Statistics set to report on retail, producer and consumer prices. The headline consumer price index (CPI) likely rose 0.5% in April, which translates into a year-over-year gain of 2.5%. So-called core inflation, which strips away volatile goods such as food and energy, is forecast to weaken to 2.2% annually during the same month.
Shifting gears to the United States, reports on PMI and new home sales will dictate investor sentiment through the early morning session. The US composite PMI is projected to rise slightly to 55.0 in May from 54.9 the previous month. The entirety of the growth is expected to come from the services sector, which accounts for the vast majority of the US economy.
Meanwhile, a report on new home sales by the Commerce Department is expected to show a decline of 2% from the previous month.
The day’s most pressing release will come our way at 18:00 GMT when the Federal Reserve publishes the transcript of the latest FOMC policy meeting. US central bankers voted against raising interest rates earlier this month, opting instead to monitor economic growth and inflation. However, the Fed is widely expected to raise interest rates at its forthcoming policy meeting next month.
The Fed’s June meeting will be accompanied by quarterly projections covering economic growth, inflation and unemployment.
The euro’s recovery attempt came up short on Tuesday, as prices reached a high of 1.826 before turning back. EUR/USD is now trading at 1.1761. Consolidation below 1.1750 would expose the pair to deeper losses.
Cable drifted slightly lower on Tuesday, as momentum continued to shift from pound sterling to the dollar. GBP/USD is now trading around 1.3420, with immediate support located at 1.3400 and 1.3350. On the flipside, resistance is likely found at 1.3450 and 1.3500.
The US dollar bottomed at 1.2746 CAD on Tuesday but quickly revered later in the session. At the time of writing, the pair was trading at 1.2839. USD/CAD faces stiff resistance at the 1.2900 level, which was the source of the last two double-top formations.