Welcome to the first half of the European session on Tuesday. We're in the calm before the storm as traders gear up for tomorrow’s big interest rate decision from the Federal Reserve. This week, it’s not just the Fed; on Thursday, we have the Bank of England’s decision, and on Friday, the Bank of Japan will follow suit. Given these upcoming events, markets are holding steady without significant movements today.
The calendar is light, with yesterday’s notable Empire State Manufacturing Index from the U.S. surprising to the upside at 11.5, well above expectations. Today, we are watching for Canada’s inflation report, with CPI expected to come in flat at 0% on a monthly basis. Additionally, retail sales data from the U.S. is forecasted to show a slight decline at -0.2%. These releases will provide further clues ahead of the major central bank decisions later this week.
On the indices front, everything is in the green. The mid-term positive sentiment continues, with the UK’s FTSE leading the charge today.
In the currency markets, the Swiss franc is showing strength, while the Canadian dollar is on the back foot ahead of the CPI release. The Japanese yen, which has been gaining, is showing signs of cooling off and might be setting up for a potential correction, though nothing is confirmed yet.
Commodities are showing mixed signals. On the metals front, we see positive moves in nickel, palladium, copper, and gold. Oil is also continuing its rise, having gained 5% in the last five days.
As for potential setups, two pairs stand out: USDCAD is still grappling with the 1.36 resistance level, while the EURJPY is testing support at 155.6. Both offer promising technical setups for traders to watch closely.