TUESDAY’S SESSION SEES CALM BEFORE THE STORM
From a data perspective, Tuesday has only a small handful of releases that could impact the financial markets. That will change in a hurry on Wednesday and for the remainder of the week leading up to the penultimate US nonfarm payrolls on Friday.
The first major report of the day will be released at 06:00 GMT when GfK reports on German consumer confidence. The forward-looking indicator is expected to remain unchanged for the month of September.
Later in the European morning, France will unveil revised second quarter GDP data, as well as the latest consumer spending figures.
In North America, Statistics Canada will report on industrial production at 12:30 GMT. The report could provide some direction for the Canadian dollar.
A half hour later, Standard & Poor’s will release the S&P/Case-Shiller Home Prices Indices. The monthly indicator provides a snapshot of housing market conditions in the world’s largest economy. Analysts are projecting year-over-year growth of 5.7%, following an identical increase the previous month.
Energy traders will also be keeping tabs on the American Petroleum Institute’s weekly crude oil report, which will make its way through the financial markets at 20:30 GMT. The official inventory report courtesy of the US Energy Information Administration (EIA) will be unveiled the following morning.
The US dollar index plunged to 19-month lows on Monday, as the euro climbed to its highest level since January 2015. The dollar index (DXY), an exchange-weighted average of the greenback against a basket of six currencies, settled at 92.21 on Monday.
The euro’s dramatic rally reached a higher level on Monday, with the EUR/USD setting a new 31-month high. The pair came within a mere 18 pips of the all-important 1.20 level and was last seen trading at 1.1968. The common currency has broken sharply to the upside, and is testing immediate resistance at the psychological 1.20 barrier. Above that level, traders are eyeing the July 2012 high of 1.2042. On the opposite side of the spectrum, support lies at 1.1960, followed by the daily low of 1.1915.
The British pound also participated in the uptrend on Monday. Cable was last seen trading near multiweek highs at 1.2938. The pair is trading above the 55-day moving average of 1.2929. Over the medium term, prices are expected to face downward pressure. Immediate resistance sits at 1.3126, according to analysts at Commerzbank. On the flipside, the 1.2775 provides a strong support zone.
A weak dollar triggered a massive rally in precious metals on Monday, with gold prices reaching their highest level since September 2016. Bullion continued higher in the Asian session, where it approached $1,320.00 a troy ounce. Risk sentiment will continue to bolster precious metals in the medium term.