EUROZONE TRADE, INVESTOR CONFIDENCE DATA ON DECK

Eurozone economic data will make headlines on Monday in a session that could see moderate trading volume following last week’s nonfarm payrolls report.

Japan’s Cabinet Office gets the ball rolling at 05:00 GMT with the monthly Eco Watchers Survey, which provides a region-by-region snapshot of key economic trends.

The Japanese yen has declined sharply as of late, a trend that accelerated after Friday’s nonfarm payrolls data. The US economy added 222,000 workers to payrolls last month, which was well above the consensus forecast calling for 178,000.

The remainder of the session will be driven by European headlines, beginning at 06:00 GMT with a report on Germany’s trade balance. Last month, the Federal Statistical Office reported a trade surplus of €19.8 billion in April.

At 08:30 GMT, Sentix will release a closely-watched indicator of Eurozone investor confidence, which is based on a survey of 1,600 financial market participants.

A half hour later, Greece will report on industrial production and consumer inflation. Europe’s most troubled economy has had a hard time getting back on its feet as its creditors mull potential debt relief.

The North American session sees very little in the way of economic data. The Federal Reserve will release its Labor Market Conditions Index, an experimental indicator that looks at the jobs market from multiple perspectives.

The US dollar index (DXY) closed higher last week, although underlying demand remained relatively subdued as traders continue to speculate about the health of the world’s largest economy.

A steady dollar triggered heavy losses for gold, which was last seen trading at four-month lows.  

EUR/USD

The euro’s rally came up short on Friday, as the dollar clawed back some of its previous declines. Although the uptrend in the EUR/USD has clearly stalled, the dollar’s outlook is unclear. This uncertainty could allow the EUR/USD to make a clean break above the 1.1400 threshold and possibly toward a new 2017 high. Upbeat Eurozone data could invite the bulls back into the market.

USD/JPY

The Japanese yen has declined sharply over the past four weeks, allowing the dollar to close in on fresh two-month highs. The USD/JPY exchange rate touched a session high of 114.07 through early-morning trade. The dollar index (DXY) remains in a bearish channel, but this isn’t preventing steady gains against the yen. Prices have broken above the prior swing resistance 113.50, pacing the way for fresh highs. The underlying trend remains bullish for the time being.

GOLD

Bullion staged a modest recovery on Monday, although the underlying trend remains firmly bearish. A stronger dollar will only hasten the yellow metal’s retreat, possibly toward the psychological $1,200 level. Gold is likely to remain in selloff mode barring any major fundamental developments.