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Economic calendar - BoC takes the stage

Summary:

  • BoC meeting could be the most interesting event today as the Bank should set expectations for rate path for the next year
  • ADP report will be the last hint ahead of the US labour data scheduled on Friday
  • DoE inventory data will be the key release for oil market today

December BoC meeting is highly anticipated despite low likelihood of a rate hike. Investors are looking for any suggestions how the bank’s monetary policy will look like in 2018, so tone of a statement accompanying the rate decision should be important for CAD. Moreover, we’ll get the ADP report on employment change in the US private sector which is the last hint ahead of NFP release. GBP traders should be also cautious as EU officials want to announce progress in the Brexit talks. The last but not least, DoE inventory data will be the crucial figure for oil market. 

1:15 pm BST - US, ADP Nonfarm Employment Change for November. The labour market is one of the most resilient parts of the US economy. After some disruptions in the third quarter due to disastrous weather conditions in form of the two major hurricanes, the situation has come back to normal. However, a solid growth in employment has not translated into higher wage pressure yet and this aspect is crucial for USD traders. Hence, unless ADP report shows employment tumbling, USD should remain quite steady. The street calls for an increase of 185k (prior: +235k).

3:00 pm BST - Canada, BoC interest rate decision. Bank of Canada had investors surprised a couple of time this year so December meeting is definitely worth watching by the CAD traders. The BoC raised rates twice during the third quarter and markets were looking for another hike in December but the Bank cooled these expectations in November. A hike seems unlikely (such move is priced in at about 20%) but it will be interesting to see how the BoC shapes expectations for the next year. 

3:30 pm BST - US, DoE report on oil inventories. Oil prices have been subdued in the last couple of hours as API report showed a large build of gasoline and distillates inventories. It could suggest that the refineries will have lower demand for crude oil - this puts pressure on prices. However, oil inventories are seen sliding by 3.4mm barrels (API estimates draw of 5.48mm barrels). An in-depth technical analysis of OIL.WTI could be found here.

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USDCAD hovers around lower bound of recent consolidation. A more hawkish signal from BoC could push the pair below the crucial support. Source: xStation5

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