• Jerome Powell to testify before the lower chamber of Congress

  • UK inflation reading may reinforce expectations of a rate hike in August

  • DOE report expected to show a significant decline in oil inventories

Jerome Powell did not rock the markets yesterday but today is another day and another hearing is scheduled. This time Fed chair will testify to the House Financial Services Committee. Apart from that, investors will be served inflation report from the UK in the morning and weekly DOE data on oil inventories in the afternoon. At 10:00 am BST the European inflation data for June will released. However, this will be the final reading and such readings rarely move the markets.

9:30 am BST – UK, CPI Inflation for June. The UK CPI inflation has decelerated as of late. Nevertheless, it is still substantially above the target set by the Bank of England. Moreover, the core measure also sits above 2% YoY therefore it seems that the rate hike may be needed in order not to let it slip. The markets odds for a rate hike in August stand at 77% at press time and a good inflation reading may boost them further. The headline measure is expected to accelerate from 2.4% YoY to 2.6% YoY while the core one should tick higher from 2.1% YoY to 2.2% YoY.

3:00 pm BST – Jerome Powell hearing. Fed chair Powell did not shake the markets yesterday as he delivered expected remarks concerning monetary policy in his testimony. Central banker highlighted that the inflation is on target with appropriate monetary policy and that the growth and labour market remains strong. Today “Jay” will appear before House Financial Services Committee. No fireworks are expected this time either but question session always possess a chance to surprise the audience.

3:30 pm BST – US, Crude Oil Inventories. Oil prices have been under pressure recently mostly due to the rumours of a possible output rise. Yesterday’s API report added to this pressures by showing a 0.6 mbd build against expectations of a 6 mbd drop. According to median estimate of economists surveyed by Bloomberg today’s DOE report should show a 3.45 mbd decline in oil inventories and a 395k drop in the gasoline stocks. On the other hand, distillate inventories should rise 1.35 mbp.

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GBPUSD retests the support zone localized a notch below the 38.2% retracement level of the major slump started after the Brexit referendum. Traders from this market should be on guard throughout the day as UK inflation report and the second Powell hearing may spur additional volatility. Source: xStation5