Summary:
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Canadian retail sales reading expected to show a minor increase
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Market consensus suggests DOE report will show a decline in inventories
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FOMC minutes to steal the show in the evening
On Wednesday investors will focus especially on the protocol from the latest Fed meeting. We will have to wait for the release of FOMC minutes until evening but the calendar also offers us some interesting readings earlier. Namely, retail sales data from Canada will be released in the early afternoon and investors will pay increased attention to it after yesterday’s wholesale sales reading disappointed. Apart from that, oil traders will be offered a weekly piece of data on oil inventories from DOE.
1:30 pm BST - Canada, Retail Sales for June. The wholesale sales data released yesterday disappointed by failing to match expectations of 0.7% MoM increase and showing a 0.8% MoM drop instead. This does not bode well for the retail sales reading as smaller sales on the wholesale level may result from smaller demand on the retail one. Having said that investors will follow today’s carefully data to see whether this is just a minor stepback or the beginning of a bigger trend. Markets expect a 0.3% MoM increase in the headline reading while the core gauge is expected to show a 0.1% MoM advance.
3:30 pm BST - DOE report. The API reading yesterday showed a 5.2 mb drop in the oil inventories while market expected just a 1 mb decline. Data combined with a weakening of the US dollar allowed oil prices to continue their march higher. However, DOE reports tend to have bigger market impact than API counterpart therefore today’s reading should be closely watched by the oil traders. Consensus provided by Bloomberg points for a 1.8 mb decrease while distillate inventories are expected to add 1.5 mb.
7:00 pm BST - FOMC Minutes. According to the Fed dot-chart we may see a total of 4 rate hikes throughout 2018. No one questions the hike in September as it seems to be a done deal. Nevertheless, investors will analyze minutes from the latest meeting carefully to see whether central bankers are sure the fourth hike in December is need and, more importantly, will the monetary tightening process continue into 2019.
USDCAD continues its pullback after peaking around 1.3390. The pair is approaching a support zone as well as the intersection of a short term downtrend line and medium term uptrend line. The upcoming data stream in the nearby future may be decisive for the direction of a break. Source: xStation5
