Today’s key release comes out of the Euro Zone where we are expecting the European Central Bank (ECB) to release the Minimum Bid Rate and the subsequent ECB Press conference. The minimum Bid rate is largely expected to remain unchanged at 0% with any changes here likely to result in heavy moves in EUR crosses, if the ECB increase rates, we would see the EUR strengthen across the board while if they cut rates further, we would see the EUR weaken significantly, perhaps even to the much touted 1 to 1 vs 1 against the USD. However, a change to the rate is highly unlikely, instead markets will focus on the ECB press conference were the ECB will communicate its current and future views on the EU economy and subsequently add any notes regarding the current and future outlook of monetary policy in the EU. Should ECB President Draghi strike a more hawkish tone, in which he talks up the EU economy and begins to mention tapering of the current measures in place, we would see stern support for the EUR as it is snapped up against its peers. However, should he strike a dovish tone, mentioning risk to the system due to the global crisis or Brexit, we would see the EUR begin to wobble as sellers take control to try test this year’s lows.
Also worth noting is the plethora of US data set to be released today, which will hold more weight after Fed Chairman Yellen`s speech yesterday in which she remained committed to tightening monetary policy provided that the economic data can support the decision. Today’s US release cover 3 sectors of the economy and offer investors a chance to react accordingly, in the form of Building Permits, Philly Fed Manufacturing Index and the Unemployment Claims which are expected at 1.22M, 16.3 and 252k respectively. Better than expected data will see the USD continue on yesterday’s bullishness as bulls drive the USD Index higher while worse than expected data will see markets disappointed after Yellen`s bullish speech and send the USD Index back towards the 100 mark.
Crude oil traders will also have something to look forwards to as we see the US release its Crude Oil Inventories figure, expected at 0.1M. The figure represents the amount of crude in stock and a higher value usually represent either an increase in supply or a decrease in demand for the black gold and will generally result in a selloff in crude. However, a lower number is generally taken as a sign of increasing demand or a decrease in supply, which will serve crude bulls well as market participant drive prices higher.