The economic calendar is off to a slow start this week, as investors parse through a light release schedule ahead of the holidays. On Tuesday, data releases from the United States and Eurozone will make headlines.
Action begins at 08:00 GMT with a report on German business conditions. The Ifo Group will release separate barometers for business climate, current assessment and expectations. The readings for December are expected to deviate very little from the previous month.
Later in the morning, the European Commission’s statistical agency will report on construction output and labour cost. The labour cost index is forecast to rise 2% in the third quarter. Construction output is forecast to grow 1.1% annually in October.
Shifting gears to North America, the Department of Labor will report on building starts and housing permits at 13:30 GMT. Starts for single-family homes are expected to decline 3.7% in November to a seasonally adjusted 1.25 million. Starts surged 13.7% the previous month. Permits, which are a bellwether of future construction plans, are expected to fall 4.9% to 1.278 million units.
On the policy docket, Federal Open Market Committee (FOMC) member Neel Kashkari will deliver a speech on Tuesday that will be closely watched by the financial markets.
Earlier in the day, the Reserve Bank of Australia (RBA) released the minutes of its most recent policy meeting, where officials voted to keep interest rates on hold.
The minutes said: “taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.”
Regarding the labour market, the minutes observed, “Growth in employment, particularly full-time employment, had increased and the unemployment rate had fallen to a four-year low. Although wage growth had been a little lower than expected in the September quarter, it appeared to have stabilised at a low rate.”
The RBA kept interest rates at a record low of 1.5% in its December meeting.
The Australian dollar was fairly stable following the release of the RBA minutes, with the AUD/USD continuing to trade around 0.7660. The pair faces immediate support at 0.7600. On the flipside, resistance is likely met at 0.7730.
Europe’s common currency held within a narrow range Tuesday, as investors awaited fresh trading catalysts. The EUR/USD was last seen trading around 1.1780. Analysts are expecting a bigger drop for the pair now that the US Fed has raised interest rates for a third time this year. That means 1.1600 is likely in play.
Cable traded slightly lower on Tuesday after posting a sharp recovery at the start of the week. The GBP/USD was last seen trading at 1.3370, having declined 0.1%. The pair likely has key support around 1.3300. On the flipside, key resistance is likely met at 1.3435.