Economic calendar: All eyes on central banks

Summary:

• Riksbank and FOMC minutes to be released today

• Bank of Canada expected to leave rates unchanged

• Oil continues recovery ahead of inventories data

Monetary policy enthusiast will be delighted on Wednesday as some events concerning central banks are scheduled for today. Riksbank minutes will be released in the early morning while FOMC will release its protocol from the latest meeting in the late evening. Bank of Canada will announce interest rate decision in meantime. Last but not least, oil traders will be served regular inventories data from the US Department of Energy.

8:30 am GMT - Riksbank minutes. Swedish central bank surprised markets in mid-December when it raised interest rate for the first time in seven years. The move was not expected therefore traders will pay double attention to today’s minutes to see what changed policymakers’ minds. Investors should stay cautious as the release is likely to spur some volatility on the SEK market.

3:00 pm GMT - Bank of Canada interest rate decision. Back in the middle of December 2018 markets were quite certain that the Bank of Canada is going to raise interest rates during January’s meeting. However, dovish tone struck by Federal Reserve greatly undermined confidence. In turn interest rate derivative market does not price in even one rate hike this year. However, it should be noted that BoC sometimes likes to surprise markets.

3:30 pm GMT - DOE oil inventories data. American Petroleum Institute signalled yesterday that crude oil inventories may have fallen 6.1 million barrels in the previous week. The draw turned out to be almost twice as big as markets expected. However, if we are to see any bigger price reaction on the oil market this decline should be confirmed by today’s DOE reading. Meanwhile, market consensus points to just a 3.3 mb decline.

7:00 pm GMT - FOMC minutes. Release of the FOMC minutes will surely be the most closely watched event of the day. Federal Reserve delivered a rate hike in December but at the same time signalled that the pace of monetary tightening is likely to slow or even pause in 2019. Money markets do not price a rate increase until at least 2020. Additionally, more and more traders began betting on a rate cut! Today’s publication may offer at least a glimpse of what policymakers expect this year.

Central bank speakers scheduled for today:

• 1:20 pm GMT - Fed’s Bostic

• 2:00 pm GMT - Fed’s Evans

• 4:30 pm GMT - Fed’s Rosengren

After halting declines somewhat above the $50 handle, Brent (OIL) began to move higher. Price moved over 17% higher since low achieved on the Boxing Day. Future of the rally may be dependant on incoming data and the outcome of US-China trade talks. Source: xStation5