US DATA WIRE HEATS UP WITH DURABLE GOODS ORDERS, MANUFACTURING
US data releases take centre stage Monday, providing traders with the latest reading of the world’s largest economy. In particular, market participants will get a glimpse of the domestic manufacturing sector, which accounts for about 12% of US gross domestic product (GDP).
The US release schedule begins at 12:30 GMT with a pair of reports. The Commerce Department will issue May durable goods orders, which tracks demand for manufactured goods meant to last three years or more. Durable goods orders are forecast to fall 0.5% following a 0.8% drop the previous month. The losses are expected to be attributed entirely to transportation. Excluding this volatile category, orders are projected to rise 0.3%.
The Chicago Federal Reserve Bank will also release its national activity index, a broad gauge of economic activity. A few hours later, the Dallas Fed will unveil its manufacturing business index for the month of June.
The US dollar could face heavier trading volumes following the daily releases, as durable goods orders are widely viewed as a volatile event. The US dollar index, which trades against a basket of six currencies, closed below 97.00 on Friday.
Prior to the North American session, traders will have their hands full with a pair of German reports and a UK data release. At 08:00 GMT, the CESifo Group will unveil its latest business conditions survey, which captures managers’ assessment of the current business climate and outlook for the future.
At 10:00 GMT, the Deutsche Bundesbank will issue the German Buba Monthly report.
On the UK docket, a report on mortgage approvals from the British Bankers’ Association (BBA) will also make headlines.
Europe’s common currency broke higher on Friday, as the US dollar retreated against its main competitors. With the gain, the euro is back to trading at 1.1200, which has proven to be a major psychological hurdle in recent weeks. The euro remains a buy-on-the-dip prospect, although long-term appeal will depend on broader market forces, such as monetary stimulus and economics.
The British pound rebounded sharply last week, as the market consolidated after a broad retreat amid Brexit talks. Since falling toward the 1.2600 handle, pound sterling has rallied around 150 pips. However, traders should err on the side of caution given the “maximum uncertainty” facing cable in the months ahead.
Gold prices are riding a three-day winning streak, as the rangebound commodity bounced back from a multi-week correction. Bullion continues to move in a predictable pattern characterised by bullish breakouts-turned-fake-outs followed by broad reversals. The yellow metal is currently trading in the mid-$1,250s. Its short-term outlook will depend largely on the appeal of the dollar and overall risk sentiment in the financial markets.