Today markets will receive monetary policy updates from both the UK and the US. Both central banks are expected to maintain a dovish policy stance while attempting to balance sub-par economic growth with future inflation expectations.
Today’s Economic Events
GBP – Claimant Count Change – 08:30 GMT
Expectations: 0.4K. Previous: 0.7K
The new jobless claims report from Britain is expected to show improvement from the previous data release. Barring any surprises, this data piece should take a back seat to the MPC Meeting Minutes that are set to be released at the same time.
GBP – MPC Meeting Minutes – 08:30 GMT
Expectations: 3-0-6. Previous: 3-0-6.
Traders will be looking for any signs of policy changes or timing of interest rate adjustments by the BoE. Yesterday Governor Mervyn King reiterated his position for a loose monetary policy despite higher than expected inflationary pressures. GBP/USD support and resistance are found at 1.6150 and 1.6515.
Oil – Crude Oil Inventories – 14:30
Expectations: 1.4M. Previous: 3.8M.
Yesterday crude oil prices rallied almost $3 from their mid-day lows. Last week’s surprising increase in crude oil stocks helped to send the price of crude oil tumbling. A larger than expected supply may cause a similar result. Spot crude oil has support at $95.65 with resistance at $104.50.
USD – FOMC Meeting Minutes
The Fed is expected to maintain the ultra-loose monetary policy as QEII will end in June. While Fed’s policy is forecasted to remain unchanged, traders should be eyeing future US data releases as a downturn in US economic data should feed into safe-haven USD buying allowing the dollar rally to continue.
JPY – Preliminary GDP – 23:50 GMT
Expectations: -0.5%. Previous: -0.3%.
The earliest report of Japanese Q1 GDP data is forecasted to show the economy has fallen back into a recession after the devastating earthquake and tsunami. Despite the lack of economic growth, yesterday the USD/JPY rose to its highest level in 2-weeks to 81.76, a level that coincides with a 38.2% retracement from the April to May move lower. The rebound in the pair could continue with resistance at the 55-day moving average at 82.10 and the 200-day moving average at 82.40.
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