DATA BACK IN FOCUS AS MARKETS LOOK FOR DIRECTION
After a quiet start to the week, economic data are back in focus on Tuesday, with key reports from both sides of the Atlantic.
Switzerland gets the ball rolling at 06:00 GMT with a monthly report on trade. The country’s trade surplus is forecast to expand modestly in July, according to a median estimate.
Later in the morning, UK National Statistics will report on public sector net borrowing for the month of July. Net borrowing is projected to grow by less than half a billion pounds, after climbing by £6.3 billion in June.
The Centre for European Economic Research (ZEW) will release its monthly survey on German investor sentiment at 09:00 GMT. The Current Situation index is forecast to drop slightly to 85.5 in August from 86.4 the previous month. The Economic Sentiment index is also projected to drop to 15.0 from 17.5. ZEW’s broader euro area Economic Sentiment indicator is expected to slide 1.4 points to 34.2.
The North American session begins with Canadian retail sales at 12:30 GMT. Receipts at retail stores climbed 0.3% in June, according to a median estimate of economists. However, all the gains are expected to come from automobile sales.
In the United States, the Federal Housing Finance Agency (FHFA) will release the Housing Price Index (HPI) at 13:00 GMT. The report provides an estimated value of housing market conditions across key metropolitan regions. The HPI is projected to climb 0.4%.
One hour later, the Federal Reserve Bank of Richmond will release its monthly manufacturing index for August. The gauge likely fall by two points for a reading of 12, based on the consensus view.
The euro broke higher on Monday, with the EUR/USD retaking 1.1800. The pair has eclipsed a key technical hurdle around 1.1790, possibly opening the door for further upside. Immediate resistance is now seen at 1.1860. On the opposite side of the ledger, dips toward 1.1690 offer strong support.
The US dollar has backpedalled in recent sessions, driving the value of the USD/CAD sharply lower. The pair was last seen trading around 1.2560, where it is down roughly 200 pips from last week’s high. The Canadian dollar has a solid long-term trajectory, supported by stronger economic growth and a more hawkish central bank. The Bank of Canada (BOC) is widely expected to raise interest rates again this year.
Haven demand continued strong on Monday, with gold prices once again approaching $1,300.00. The yellow metal briefly eclipsed that milestone last week for the first time since December. The daily chart shows strong buy positions for bullion, with relative strength and the MACD in bullish territory. The short-term outlook will largely depend on underlying risk sentiment in the broader market.