EUROZONE SENTIMENT INDICATORS IN THE SPOTLIGHT ON TUESDAY
After a slow start to the week, Tuesday sees a broad pickup in reporting activity with a pair of Eurozone reports set to make headlines.
The ZEW Centre for European Economic Research will report a pair of sentiment indicators gauging institutional investor confidence. The German report will be released alongside the euro-wide data set at 10:00 GMT. Both indicators are expected to show a slight uptick in the economic sentiment index for January.
Later in the day, the European Commission’s statistical agency will report on consumer confidence for the month of January. The preliminary reading is expected to show a slight increase to 0.6 from 0.5 in December.
In other European releases, the UK Office for National Statistics will report on public sector net borrowing for the month of December. Later in the session, the Confederation of British Industry (CBI) will release its industrial trends survey for January.
Shifting gears to the United States, the Richmond Federal Reserve Bank will release its monthly manufacturing index at 15:00 GMT. The manufacturing indicator is expected to dip slightly to 19 from 20 in December.
Energy traders will also be keeping a close eye on the weekly crude inventory report courtesy of the American Petroleum Institute (API). The US Energy Information Administration (EIA) will issue the official data set the following morning.
Oil prices have been riding multi-year highs in January, with investors rallying behind an improved supply-demand outlook in the global market. ICE Brent crude futures briefly traded above $70 a barrel, a positive sign for global producers.
In monetary policy news, the Bank of Japan (BOJ) voted to keep interest rates unchanged on Tuesday, as officials continued to look for signs of inflation. The Japanese central bank is maintaining ultra-low interest rates in support of a broader economic recovery that is finally showing signs of materializing.
The euro maintained its composure on Monday even as the dollar showed signs of life following a decision by the Senate to reopen the US federal government. The EUR/USD exchange rate was last seen hovering around 1.2264, where it was little changed compared to the previous close.
The dollar was back on the defensive against the yen, with the USD/JPY exchange rate falling 0.3% to 110.66. The yen is benefitting from a brief bout of risk aversion tied to geopolitical risks. In the short term, prices face a strong resistance around the 100-day SMA of 111.75.
Crude oil has been one of the biggest stories of 2018 with prices rallying above the $70 mark on several occasions. UK crude prices were last seen hovering around $69.40 a barrel. The outlook remains firmly higher, with investors eyeing gains north of the psychological $70 barrier.