Markets on the lookout for Trump speech. GBP/USD is currently trading at about 1.2160, GBP/EUR is also trading higher than where it was this time on Tuesday (just above the 1.1500 level). Speculators may be coming into Sterling in the past 24- hours or so, limiting the falls in the Sterling, just selling off a little bit of their Sterling shorts ahead of a bit of a policy risk later on today.
We have Bank of England governor Mark Carney testifying in front of law makers in the House of Commons later on today, alongside him would be members of the Financial Policy Committee, so the conversation would be more about financial stability than interest rates per say, of which we would have a look obviously of what’s likely to happen with inflation for example in the United Kingdom economy, the exposure of the banking system to for example Italian banks moving forward and obviously a health check of the United Kingdom economy as a whole.
Given Andrew G. Haldane the Chief Economist at the Bank of England comments last week, that the Bank of England may have had a Michael Fish moment, you’ll expect this to be a rather terse encounter between Mark Carney and his main agitator Jacob Risse from the Torre MP.
So Sterling is a little bit higher than where it was this time on Tuesday, gaining a little bit against the United States dollar, but the U.S. dollar is actually fighting back a little bit through the Asian session ahead of Trump press conference at 16:00 (BST) tonight. We are expecting Trump to really try and actually lay out some facts, hopefully some details around his trade policy with China, trade policy with Mexico and maybe get some comments as well around his thoughts on the Federal Reserve interest rate rise that we saw in December.
This is a golden opportunity or Donald Trump to shower praise on his cabinet nominations which are currently going through the Senate. We look to see whether the bravado carries the United States dollar higher later on in the session. Elsewhere, Eurozone inflation from Greece and from Portugal which would likely be bid up on oil and UK industrial production which should show that UK’s growth is continuing to do well courtesy of a devalued Pound.
Prices of oil is shown to have traded somewhat higher on Wednesday, pushed higher on reports surrounding Saudi Arabia’s production cuts. The U.S. WTI crude oil futures traded higher ¢15 since the close on Tuesday, to test the $50.97 per barrel. Also trading higher is Brent crude, which went up ¢11 to test the $53.75 per barrel level. No minding the modest gains both commodities traded lower close to 6% since the start of 2017.
There were announcement from the U.S. Energy Information Administration on Tuesday that the American crude production will jump in 2017 by 110k barrels per day, to hit a 9 million barrels per day mark. Also weighing on oil prices is the U.S. stockpile figures, and investors are eager for the reports which is billed for Wednesday.
The worries as to whether OPEN and non-OPEC member states will comply with their agreements to slash output remains a lingering one, severe cold weather forced production to a halt in Russia during the early days of the year, bringing production lower by around 100k barrels per day. This is not a permanent move, but traders are hoping that it’ll help lower production and encourage other countries to put a lid on their production as well, thus maintaining higher oil prices.