DATA DELUGE CONTINUES TUESDAY WITH EUROZONE GDP, US PCE

After an active Monday session, traders are gearing up for another whirlwind session on the economic calendar. A deluge of market-moving reports will make their way through the markets on Tuesday, with Eurozone and US data set to make headlines.

Action begins at 07:55 GMT with German unemployment. Europe’s largest economy is forecast to show an unemployment rate of 5.7% in July, unchanged from the previous month.

IHS Markit will release a bevy of PMI reports around the same time covering Germany and the broader euro area. Both regions are expected to register strong growth in manufacturing output for the month of July.

At 8:30 GMT, Markit will produce its UK manufacturing PMI report. The country’s manufacturing sector is forecast to expand at a steady rate in July.

At 9:00 GMT, the European Commission’s statistical agency will release preliminary second-quarter GDP figures. The 10-member euro area economy is forecast to expand 0.6% in the second quarter, following a similar gain in Q1. That should translate into a year-over-year gain of 2.1%.

Solid GDP data could trigger fresh gains for the euro, which is already riding multiyear highs on expectations the European Central Bank (ECB) may be ready to start scaling back quantitative easing sooner rather than later.

Action continues in North America, beginning at 12:30 GMT with a report on US personal income and outlays. Personal income from all sources is projected to rise 0.3% in June. Spending is forecast to edge up 0.1% during the same month.

The monthly release will also include the core personal consumption expenditures (PCE) index, which is the Federal Reserve’s preferred measure of inflation.

Later in the day, the Institute for Supply Management (ISM) will release its closely-followed manufacturing PMI for the US economy. The gauge is expected to fall to 56.5 from a robust 57.8 in June.

EUR/USD

High profile economic data are expected to drive heavy volatility for the EUR/USD. The pair continues to set new highs after breaking above 1.1800 at the start of the week. However, some analysts are warning that the euro has gained too much, too fast. Traders should be prepared for a pullback as prices exceed overbought thresholds on the short-term momentum indicators.

GBP/USD

Like the euro, the British pound also notched fresh highs against the dollar on Monday, with cable surpassing the 1.3200 plateau. The GBP/USD is likely due for a reversal in the medium term as the Brexit bears re-enter the market. Cable remains vulnerable ahead of Thursday’s Bank of England rate announcement.

USD/CAD

The Canadian dollar eased off yearly highs on Monday, but remained well supported for further encroachment on its southern counterpart. The USD/CAD is toeing the line at 1.2500. Fundamental forces will continue to dictate the flow of this market, with a pervasively weak US dollar providing much of the upward catalyst for the loonie.