Fundamental Analysis

Markets Look To Monetary Policy As Central Bankers Chime In

Typography

The financial community will have a dual focus on Thursday, as a steady stream of economic data is accompanied by fresh commentary from multiple central bankers from Europe and the United States.

The Thursday session kicks off at 6:45 GMT with a report on French consumer inflation. Headline CPI is expected to come in at 1.1% in the 12 months through September.

Later in the day, the European Commission's statistical agency will release Eurozone industrial production figures for the month of August. The monthly print is expected to show a gain of 0.5%. That will translate into year-over-year growth of 2.5%, forecasters say.

Portugal's consumer price index (CPI) will make headlines at 10:00 GMT before attention shifts to North America.

The US Labor Department will report on factory-gate prices at 08:30 GMT. The producer price index (PPI) is expected to rise 2.5% annually in September, up from 2.4% the previous month. Core PPI likely rose 2% year-over-year, according to forecasts.

Bank of England (BOE) Monetary Policy Committee member Andrew Haldane will kick off the central bank commentary at 13:00 GMT. Haldane has emerged as one of the BOE's more hawkish members.

Later in the day, European Central Bank (ECB) President Mario Draghi and Executive Board Member Peter Praet will also deliver speeches.

Federal Reserve bankers Jerome Powell and Lael Brainard are also due to speak.

EUR/USD

The euro sprang forward on Wednesday, rising to two-week highs against the greenback. The EUR/USD continued higher overnight, where it came within 12 pips of 1.1900. Markets are in a bullish phase, as prices extend further beyond the 200-day simple moving average (SMA). At the moment, the EUR/USD faces an initial resistance at the 2 August high of 1.1911. On the opposite side of the ledger, support is located at the 6 October low of 1.1686.

USD/CAD

The USD/CAD followed the greenback lower on Wednesday, as prices fell back below 1.2500. The Canadian dollar is also being supported by booming oil prices, of which Canada is a prime exporter. The USD/CAD edged even lower overnight, where it was trading in the 1.2440 range. A sharp pullback toward the 1.2400 handle could expose the pair to an even bigger correction following a month-long winning streak.

US OIL

Oil prices are riding high this week on signs of improving demand. US crude prices rose sharply above $51.00 a barrel on Wednesday. Prices pulled back through the overnight trade to settle in the low $51.00 range. The latest rally in oil prices formed a double-top. A failure to extend the gains north of $51.40 may trigger another short-term pullback in the market. That being said, the bulls are finally gaining traction.

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