EUROPEAN, NORTH AMERICAN DATA ON DECK FRIDAY

Traders hoping for a calm end to the week could be in for a surprise on Friday, as a steady stream of European and North American releases make their way through the financial markets. The upcoming reports could have a direct impact on the currency markets, which have shorted the dollar this week.

The data wire begins at 06:00 GMT with German retail sales. Germany is Europe’s largest economy, making retail sales an important proxy of regional consumer spending. A few hours later, the German government will also report on unemployment for the month of June. The jobless rate is forecast to hold steady.

Action resumes at 08:30 GMT when the Office for National Statistics releases revised UK GDP data. The UK economy is forecast to have grown 0.6% in the first quarter, unchanged from the previous estimate. Government economists will also report on the first quarter current account balance at 08:30 GMT.

A half hour later, the European Commission’s statistics agency will unveil preliminary Eurozone consumer inflation data for the month of June. The consumer price index (CPI) is forecast to fall to 1.2% annually. Weaker inflation could weigh on the euro, which has skyrocketed this week amid signs the European Central Bank (ECB) was becoming more satisfied in the region’s recovery.

The start of North American trade also features a batch of high-profile US data. At 12:30 GMT, the Commerce Department will issue its monthly personal income and outlays report. The data set are expected to show a 0.1% uptick in personal spending last month. Personal income from all sources is forecast to climb 0.3%.

The same report will also provide the latest estimate of core personal consumption expenditures (PCE) – the Federal Reserve’s preferred measure of inflation. The core PCE index is forecast to drop to 1.5% from 1.7%.

The US dollar index, which is used to track the greenback’s performance against a basket of six competitors, is currently trading at its lowest level since September.

EUR/USD

The euro is currently trading at 14-month highs against the dollar, as the latter continues to run out of favour with investors. Upward momentum in the EUR/USD could face challenges in the form of weak Eurozone CPI and overbought conditions. Traders can therefore expect an active Friday session. 

GBP/USD

Cable reached a critical milestone on Thursday by climbing above 1.30 for the first time since May. Bias remains on the bullish side, as traders eye fresh highs north of 1.3050. On the downside, support is likely found near 1.2900.

GOLD

Bullion’s upward correction ran into fierce resistance Thursday, as prices tumbled back below the $1,250.00 handle. Prices are poised to end lower for the week, which paints an ominous picture for the yellow metal. That gold was unable to post steady gains during the dollar’s worst selloff of the year is by itself cause for alarm.