Central bankers will be the center of attention over the next couple of days, with a number of policymakers appearing, including Federal Reserve Chair Janet Yellen, ECB President Mario Draghi and the Bank of England Governor Mark Carney.
A renewed sell-off in crude oil prices amid oversupply concerns effectively dented risk sentiment on Wednesday with global stocks exposed to heavy losses as oil bears pressured equity bulls. European markets were punished by the sharp decline in energy shares and the bearish contagion was swift to contaminate Wall Street which concluded mostly lower. Although Asian stocks edged cautiously higher during Thursday’s trading session, the lack of appetite for risk may limit upside gains.
U.S. indices are seen pulling a little further away from record high levels on Wednesday, as we appear to see a slight shift in risk appetite although there are no signs at this stage of a broader trend developing.
The euro/British pound currency pair has actually respected its long-term resistance in the 0.8860-85 range, an area which was formerly seen as support. But, so far, we haven’t seen a breakdown in market structure.
Last week saw four major central banks announce their policy decisions. Among them, the Bank of Japan remained quite dovish while the U.S. Federal Reserve and Bank of England learned surprisingly more towards the hawkish side. The dollar and pound showed moments of strength while the yen weakened across the board. But after a busy week of fundamental events, this week is set to be a quieter one in terms of economic data and central bank meetings.