American FX Outlook: Fed vice chairman and Bank of Canada Governor speeches headline with durables

What you need to know before markets open

• Asian and European equity markets were shaky on Wednesday even as Trump signaled a shift from imposing China investment limits. 
• The Bank of England Financial Stability report headlined higher capital buffer in UK banks and lower level of household and corporate indebtedness in the UK while pointing out to external risks like trade wars, high leverage in the US, high and rising debt in China and political uncertainty in Italy.
• The US session is highlighted by US durable goods orders and central bank speakers including Federal Reserve’s vice-chairman Quarles, the Bank of Canada Governor Stephen Poloz and the RBNZ monetary policy decision followed by press conference with Governor Adrian Orr.

Wednesday's upcoming market moving events

• The US trade balance is expected to reach a deficit of -68.9 billion US Dollars.
• The US durable goods orders are expected to fall -1.0% m/m in May with core durables excluding transportation rising 0.5% m/m.
• Federal Reserve Governor Randal Quarles is scheduled to speak about financial regulation at the Utah Bankers Association Annual Convention at 15:00 GMT.
• The Bank of Canada Governor Stephen Poloz is scheduled to speak at the Greater Victoria Chamber of Commerce, in British Columbia at 19:00 GMT with the text of the speech released 15 minutes before the scheduled time.
• The Reserve Bank of New Zealand is expected to hold the OCR steady at 1.75% with inflation subdued and risks of global trade wars hurting the NZ economy. For details read my Preview here.

Major market themes

• The Euro fell to daily lows of 1.1620 as the ongoing risk aversion benefits the US Dollar and the Japanese Yen.
• Sterling fell past 1.3200 level after the financial stability report raised concerns about trade tensions, but the press conference with the Bank of England Governor Mark Carney was financial stability, not monetary policy oriented. 
• Watch CAD for reaction to BoC’s Governor Poloz speaking as Canada prepares retaliatory action on steel imports from the US.
• Watch NZD factoring in the RBNZ deciding on monetary policy with no change to current setup expected. For details read my Preview here.

Earlier in Asia/Europe

• The Eurozone annual growth rate of adjusted loans to non-financial corporations increased to 3.6% in May from 3.3% in April.
• The Bank of England financial stability report stated that the levels of household and corporate debt in the UK relative to incomes remain materially below their 2008 levels.
• The Bank of England financial stability report noticed that major UK banks’ capital strength has tripled since 2007, with an aggregate Tier 1 capital ratio of 17% in 2018 Q1.
• The Bank of England financial stability report noted the risks stemming from rising Italian government bond yields, high level of indebtedness in China and trade tensions.