Wednesday sees the United Kingdom release the Services PMI number, with an anticipated release of 58.5 for the month. We believe the GBP/USD pair will more than likely be greatly influenced by this, just as the FTSE will be. With that, we will be watching for the announcement to move the markets in one direction or the other. Expect week is out of the British pound and the FTSE if the number is less, and strength of it is more. Nonetheless, this should be more or less a short-term move.
The next major announcement for the day is the Bank of Canada interest-rate decision. With that, the market will more than likely focus on the USD/CAD pair as a result. The 1.10 level continues to be a significant resistance barrier to this market, and with that being the case the statement after the announcement will be greatly parsed and scrutinized. We expect to see the market react rather drastically, especially if the statement suggests that the Bank of Canada is still looking to stay very weak when it comes to monetary policy. If that happens, we could finally break above the 1.10 handle.
The Federal Reserve’s Beige Book comes out later in the day as well, and we believe that the market should pay close attention to the antidotal evidence of the economy and its growth. This will have an influence on the US stock markets, although we recognize that the nonfarm payroll numbers come out on Friday, so that of course will take center stage. With that, we feel that the stock markets in America are essentially looking for an excuse to start buying, so we are looking for break out to the upside and above the 2005 were so in the S&P 500, or any pullback that show signs of support.