Oil Inventories and US Housing Data in Focus

Financial markets are expected to remain relatively subdued on Tuesday as tomorrow’s Bank of Japan and Federal Reserve meetings push traders to the sidelines in anticipation of some very volatile markets.

As is often the case ahead of a major central bank event, traders can get a little nervous and sit on the fence. The fact that we have two on the same day is only exacerbating the problem. While there is scope for intraday volatility I don’t expect to see many major swings ahead of the BoJ decision tomorrow.

Pound Woes Continue, Focus on Fed and BoJ

Commodity markets have been a good source of volatility over the last week, particularly oil which has come off again after last weeks’ rally. It is coming under pressure again today although it is struggling to gather any real momentum, with $45.50-46 providing support in Brent crude and $43 in WTI. The API inventory data could be the catalyst to take it below these levels when it’s released later in the session, although it is worth noting that the last two weeks have reported a build in inventories. The suggestion by Venezuelan oil minister Eulogio Del Pino that supply needs to drop by around 10% to match demand did appear to weigh on oil earlier in the session, although this wasn’t quite enough to see oil through this key support zone.

US housing data is also being released on Tuesday which may have provided a spark for the markets but for the Fed stealing the spotlight. The data has more than likely come too late to impact the outcome of the meeting, not to mention the fact that it isn’t something that policy makers have flagged as being particularly influential in their decision making. Still, it could spark some life into the dollar, which is currently trading marginally lower on the session.

USD/CAD – Canadian Dollar Edges Higher, Fed Announcement Looms

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.