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Day Ahead: Top 3 Things to Watch

Published 08/21/2018, 04:15 PM
Updated 08/21/2018, 04:26 PM
© Reuters.  The Fed's minutes from its previous meeting could hold key clues about future monetary policy

Investing.com - Here’s a preview of the top 3 things that could rock markets tomorrow.

1. Fed Minutes Eyed for Rate-Hike Clues

The Federal Reserve on Wednesday releases the minutes of its previous meeting due 2:00 p.m. ET.

Traders are expected to parse the minutes for clues about future rate hikes and a possible update on the central bank's efforts to unwind its massive $4.2 trillion balance sheet.

Investors are keen to get a sense of the Fed's monetary policy plans for next year as inflation has reached the 2% target, and unemployment has dropped below 4% -- the lowest since 2000.

In its July 31-Aug. 1 meeting, the Federal Reserve left rates unchanged and gave an upbeat assessment of the economy, leaving little doubt that the central bank will meet expectations and raise rates next month.

But President Trump has been highly critical over the Fed's rate hikes, calling on the central bank to do more to boost U.S. growth.

While Trump's remarks are not expected to influence Fed policymakers, the dollar sold off sharply Tuesday to a nearly two-week low.

2. U.S. Housing Data, China-U.S. Talks Get Underway

U.S. housing activity is expected to show a rebound after an unexpected fall in June.

Existing Home Sales due 10.00 a.m. ET for July is expected to show a rise of 0.6% to a seasonally adjusted annual rate of 5.44 million units, after falling 0.6% in June.

The fall in June was blamed on a mismatch between the growing level of homebuyer demand and the declining pace of home sales.

Elsewhere, the United States and China are set to return to the negotiating table on Wednesday, to hash out their differences on trade, but market participants are not expecting much in the way of progress from the mid-level talks.

Yet it is hoped the dialogue would pave the way for more meaningful talks in the future that could lead to the end of the trade war as early as November, when President Trump and Chinese counterpart Xi Jinping are due to meet.

Any murmurs from the trade talks could determine direction for trade-sensitive stocks such as Boeing Co (NYSE:BA) and Caterpillar Inc (NYSE:CAT) – both have significant international exposure.

3. Energy Information Administration's Weekly Inventory Report on Tap

A fresh batch of inventory data from the Energy Information Administration (EIA) on Wednesday is expected to show that U.S. crude stockpiles fell last week after an unexpected climb in the prior week.

Analysts forecast crude inventories fell by about 1.497 million barrels in the week ended Aug. 17. Domestic crude output – which rose for the first time in three weeks to 10.9 million barrels a day in the prior week – is also likely to garner investor attention.

Crude oil futures settled higher on Tuesday on signs of tightening crude supplies and expectations for steep losses of Iranian crude amid U.S. sanctions.

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