UK INFLATION REPORT HEARINGS ON DECK
Tuesday is expected to be another subdued trading session in the financial markets, as a dearth of economic data keeps investors fixated on geopolitics and US holidays.
Action begins at 07:00 GMT with a report on Switzerland’s trade balance. The Swiss trade surplus is forecast to rise steadily in October thanks to higher exports.
Shifting gears to the broader Eurozone, the European Central Bank (ECB) will publish its biannual Financial Stability Review at 09:00 GMT. The report provides an overview of the possible sources of risk impacting financial stability in the common currency region.
In the United Kingdom, the Office for National Statistics will report on public sector net borrowing at 09:30 GMT. The monthly report is expected to show a sharp rise in net borrowing levels, possibly reaching £6.6 billion. September public sector net borrowing was £5.326 billion.
The Treasury Committee is also expected to hold the Inflation Report Hearings at 10:00 GMT. The United Kingdom has witnessed a sharp rise in consumer prices ever since the Bank of England (BOE) cut interest rates into record territory in August 2016. In response, central bankers recently voted in favour of a 25-basis point increase in the benchmark lending rate.
At 11:00 GMT, the Confederation of British Industry (CBI) will report on its monthly Industrial Trends Survey, which provides a qualitative opinion of domestic manufacturing.
The North American session begins with a report from the Chicago Federal Reserve Bank. The National Activity Index is expected to come in at 0.20 in October from 0.17 the previous month. Anything above zero implies growth.
Later in the session, the National Association of Realtors (NAR) will report on existing home sales for the month of October. Sales of previously-owned homes are expected to rise 0.7% to a seasonally adjusted 5.43 million.
Energy traders will also be keeping a close eye on the weekly crude inventory report courtesy of the American Petroleum Institute (API).
In terms of monetary policy, Fed Chairwoman Janet Yellen is scheduled to deliver a speech late on Tuesday.
Oil prices edged lower on Monday, but remain in a firm months-long uptrend. US crude remains well supported above $56.00 a barrel, and is currently trading at a $6 discount to Brent. Investors should keep a close eye on inventory data over the next two days.
The euro gave back gains to the dollar on Monday, as the EUR/USD settled in the lower half of 1.1700. The pair was last seen trading at 1.1737, with immediate support located at 1.1705. A strong resistance is forming at 1.1800.
The British pound was trading steady on Tuesday, as prices continued to hold well above the 1.3200 handle. Cable recently hit two-and-a-half week highs, but now finds itself consolidating in the mid-1.32 region. GBP/USD is eyeing a close above 1.3260 for confirmation of the next bullish breakout.