ECONOMIC DATA TO DOMINATE HEADLINES ON TUESDAY
After a slow start to the week, investors are bracing for an active news wire on Tuesday with reports from both sides of the Atlantic.
Action begins at 06:00 GMT with a report on German GDP. Europe’s largest economy is forecast to grow 0.7% in the second quarter, which translates into year-over-year gains of 1.9%.
The Swiss government will release producer inflation figures at 07:15 GMT. The producer price index (PPI) is forecast to go unchanged for the month of July.
British inflation data will dominate headlines at 08:30 GMT with reports on producer and consumer prices. The producer price index (PPI) is forecast to rise 3.1% annually in July. Meanwhile, consumer inflation is projected to rise to 2.7% from 2.6% previously. Core prices, which exclude volatile items such as food and energy, are also expected to rise 2.5% from 2.4% in June.
Investors can expect heavy action at the start of New York trading. The New York Fed will release its monthly manufacturing index for August. The report is expected to show a slight uptick in regional factory output.
Separately, the Commerce Department will issue its monthly retail sales report. Retail sales, which are a proxy for consumer spending, are forecast to climb 0.4% in July after falling 0.2% the previous month.
The Commerce Department will also report on business inventories later in the session while the National Association of Home Builders (NAHB) will issue its latest housing market index. The NAHB report is considered an important proxy for builder confidence.
In currencies, the US dollar was trading slightly higher against a basket of global rivals, but has declined 8.5% year-to-date. The euro and pound have lost some of their zest recently as the greenback showed signs of stability.
After testing the boundaries of 1.1850 on Friday, the EUR/USD has fallen back below 1.1800, a sign that the market was consolidating following a string of massive gains. The pair faces immediate support at the 21-day simple moving average (SMA), which is located at 1.1722. On the opposite side of the ledger, the 11 August high of 1.1846 is the first line of resistance.
The Cable continues to trade below the psychological 1.30 level. As a result, price action is in wait-and-see mode. A return above this level is needed to drive the bull market forward. The GBP/USD has lost considerable momentum since the most recent Bank of England policy meeting.
Gold prices reversed course at the start of the week and continued lower on Tuesday, as risk appetite returned to the financial markets. Spot gold was down roughly half a percent in Asian trade, falling further away from the elusive $1,300.00 level. Consolidation is expected to continue now that geopolitical risks are fading.