Central Banks Back in the Spotlight
After another day in which US equity markets set new records, futures are pointing to another flat open on Wall Street in the absence of much direction from Europe.
We’ll hear from a variety of central bankers throughout the day, including the heads of three of the most closely followed at the moment, the Federal Reserve, ECB and Bank of Canada. All three central banks have been actively engaged in tightening monetary policy over the course of this year, to different extents, which makes these interviews and speeches all the more important.
EUR Continues Decline as Draghi Avoids Offering New Clues
Mario Draghi, the ECB President, was first up this morning but his speech was more focused on banking supervision. Draghi did touch on negative interest rates but not in the context of how it will impact monetary policy decisions going forward. The euro is coming under a little pressure this morning but it’s unlikely to be related to Draghi’s words or the data we’ve had, for that matter, with retail sales having actually exceeded expectations in September. This morning’s moves in the euro simply appear to be an extension of the initial post-ECB meeting decline, following a brief period of consolidation. The euro may run into further support around 1.1450 – 1.15 against the dollar in the near term but further downside could follow in the weeks and months ahead.
Will Traders Be As Receptive to Yellen Commentary as Term Comes to an End?
Two Fed policy maker are due to make an appearance today, Janet Yellen the outgoing Chair and Randal Quarles, who recently joined the Board of Governors. Typically it would be Yellen’s comments that would be of most interest but under the circumstances, it may be Quarles that most are interested in hearing from. Yellen’s term will end in February and a rate hike in December is almost entirely priced in, leaving us with little to potentially take from her message, especially given the number of positions still to be filled on the board.
Source – CME Group FedWatch Tool
Traders Eye Poloz Comments For BoC Rate Clues
The BoC’s decision to raise interest rates at two consecutive meetings in July and September and follow this with, what was at least perceived to be, a dovish stance after the meeting last month has raised many questions about how many further rate hikes we can expect going forward. While the central bank has stressed its data dependent stance due to the sensitivity of the economy to different factors, Governor Stephen Poloz may today offer some insight into how things have progressed since and how many rate hikes we can expect over the coming 12 months, if the economy performs as expected.
Once again the week is looking a little quieter from a data perspective and the same is certainly true today. The only notable release from the US will be JOLTS job openings, although given recent moves in oil markets, API crude inventory data will also likely be closely monitored.
For a look at all of today’s economic events, check out our economic calendar.