EUR, USD, GBP and JPY are in the spotlight on Tuesday ahead of the ECB Conference due at 10am GMT.
The four big CBs M. Draghi, J. Yellen, M. Carney and H. Kuroda are expected to speak today at 10am GMT. Their speeches will drive major moves in the markets.
So, what lies ahead for EURUSD?
Ahead of ECB President Mario Draghi’s speech, the single currency posted marginal gains this morning against its greenback counterpart, driving EURUSD to the 1.16876-82 close area.
Generally, the pair seems to be following an upward trend, extending its positive streak for a fifth session in a row despite its somewhat chill pace and looking for more impetus to break above the critical 1.1699-1.1712 R2-R3 levels.
The USD’s move is characterised by lack of direction as the ‘Trumpflation’ seems to be losing momentum. Furthermore, the US 10-year yields dipped after hitting 2.41% at the beginning of the week.
Investors are also keeping a close eye on the final CPI figures for October in the euro bloc and the German ZEW survey next in the pipeline. However, CB policymakers are pulling the lead likely to make or break EURUSD trading today and for the days to come. M. Draghi, J. Yellen, M. Carney and H. Kuroda are expected to express their viewpoints on monetary policy at the ‘Communication challenges for policy effectiveness, accountability and reputation’ organised by the ECB in Frankfurt. How effective is the ECB’s policy? Any room for rate hikes? We shall see.
In today’s early European session, the USDJPY pair did not show any clear directional bias, oscillating in a narrow trading band, above the 113.60 (open).
Combined diverging factors failed to push the pair higher, keeping it within its 3-week old trading range. A slow pickup in the US Treasury yields helped reduce the downside shock, while the prevailing caution hovering above the JPY’s stability was perceived by traders as capping the pair’s upbeat.
Currently USDJPY trades around 113.874 -75 (close) as traders seemed to have turned a blind eye on the buck’s mildly softer tone, with the US bond yields and broader market risk sentiment being the key drivers of the pair’s dynamics today.
Today’s speeches from Governor H. Kuroda and Fed Chair J. Yellen are closely eyed and expected to move the pair further.
Next on the traders’ agenda is GBP and GBPUSD.
In the UK’s policymakers’ pipeline for today is the CPI report. The consumer prices are expected to rise to 31.1% in October y/y, while core figures, with the exception of volatile food and fuel prices, are also estimated to gain some impetus, ticking slightly higher to 2.8%.
Compared to September’s m-o-m 0.3% consumer prices, in October they’re expected to come in at 0.2% on monthly basis.
What’s in it for GBPUSD? As TDS analysts forecast CPIs to speed up to 3.3% y/y in October, GBPUSD is likely to target 1.30 on the news.
Hitting a low of 1.130906, the cable is now trading around 1.13186-7. The final determinant of the pair’s move is the awaited BOE Governor M. Carney’s speech today. Will the Sterling’s purchasing power be further dragged down by inflation? Stay tuned for more!