ECONOMIC DATA, MONETARY POLICY HEADLINE POST-LABOUR DAY ACTION
The global financial markets are in full swing on Tuesday, as North American investors return from the Labour Day long weekend. Economic data will dominate the newswire amid geopolitical escalations on the Korean peninsula.
Action begins in Europe at 5:45 GMT with Swiss gross domestic product (GDP). The Swiss economy expanded 0.5% in the second quarter, based on a median estimate of economists. That translates into a year-over-year expansion of 1.1%.
The Swiss government will also report on consumer inflation at 07:15 GMT. The August consumer price index (CPI) is expected to be flat, following a decline of 0.3% in July.
PMI data will make headlines over the next few hours, with Composite reports for Italy, France, Germany and the 19-member Eurozone. The Composite PMI provides a snapshot of service and manufacturing activity.
IHS Markit will also report on UK services PMI at 08:30 GMT.
Sticking with the Eurozone, Eurostat will produce official retail sales data at 10:00 GMT. Receipts at retail stores are forecast to drop 0.1% in July. That translates into a year-over-year gain of 2.5%.
In North America, the US Commerce Department will report on factory orders for the world’s largest economy. Factory orders are projected to drop 3.2% in July after rising 0.3% the month before.
On the monetary policy front, Federal Open Market Committee (FOMC) member Lael Brainard will deliver a speech at 12:00 GMT. FOMC members Neel Kashkari and Robert Kaplan will also deliver speeches at 17:10 GMT and 22:05 GMT, respectively.
Earlier in the day, the Reserve Bank of Australia (RBA) kept interest rates on hold at 1.5%, where they’ve stood since August 2016.
The EUR/USD held within a narrow range on Monday in a session that saw limited trading volume. The pair is trading just above 1.1900, having fallen sharply from the August high of 1.2064. Immediate trend line support is located at 1.1828. A break below that level would expose the 1.1709 region as the next support target. On the opposite side of the ledger, the psychological 1.2000 level continues to offer immediate resistance.
Cable traded within a narrow range at the start of the week, as investors awaited fresh catalysts in the form of economic data and monetary policy speeches. The GBP/USD was last seen trading at 1.2924. The pound continues to find strong support near the 1.2900 area, but lacks momentum to extend gains north of 1.3000.
Gold prices surged to nearly one-year highs on Monday, as risk aversion drove investors into the safety of precious metals. Spot prices continued higher in Tuesday’s Asian session, where they approached $1,339 a troy ounce. The outlook on bullion remains tied to ongoing developments on the Korean peninsula.