Central bank speakers will hog the spotlight on Tuesday, with the Federal Reserve’s Jerome Powell scheduled to testify before Congress and the Bank of England’s Mark Carney set to speak publicly. Investors can also expect a steady stream of economic data from Europe and the United States to be in the headlines.
The economic calendar kicks off at 08:00 GMT with a report on Italian industrial production. BOE Governor Mark Carney is scheduled to begin his speech at the same time.
Attention will remain on the UK over the next hour as the Office for National Statistics releases the latest employment numbers for the months of May and June.
Britain’s ILO calculated unemployment rate is expected to hold steady at 4.2% in the three months through May. Average hourly earnings including bonuses are projected to rise 2.5% year-over-year between March and May.
Meanwhile, the claimant count change for the month of June is expected to show an increase of 2,300 workers collecting unemployment benefits following a decline of 7,700 the month before.
Shifting gears to North America, the Canadian government will report on manufacturing shipments at 12:30 GMT. Shipments are projected to rise 0.6% for May after falling 1.3% the month before.
The US Fed will report on industrial production and capacity utilization at 13:15 GMT. Output at US factories likely rose 0.5% in June and the capacity utilization rate is projected to rise to 78.3%.
Fed Chairman Jerome Powell heads to Congress on Tuesday for two days of testimony on the economy. Under Powell, the Fed has raised interest rates twice this year and is planning on two additional upward adjustments in the back half of 2018.
Powell will continue his testimony on Wednesday.
Europe’s common currency gained momentum on Monday, with EUR/USD crossing the 1.1700 threshold for the first time since 11 July. The pair is trading right around that level as investors await Powell’s testimony. EUR/USD faces immediate resistance at 1.1735, which corresponds with the 55-day moving average.
Cable continued higher on Monday, extending last week’s recovery as the dollar weakened against a basket of currencies. GBP/USD maxed out at 1.3289, a one-week high, before consolidating around 1.3230. The pair is likely to run into resistance north of 1.3250, with the psychological 1.3300 level offering a stiff barrier. On the flipside, immediate support is located at 1.3225.
The North American pair held lower on Monday despite a 4% selloff in oil prices. USD/CAD now sits at 1.3137, with the technical indicators showing a neutral short-term outlook. Immediate support is located at 1.3080, followed by the 1.3000 handle. On the opposite side of the ledger, immediate resistance is found at 1.3265, followed by 1.3380.