ECONOMIC DATA, MONETARY POLICY TO DRIVE MARKETS ON THURSDAY
Investors are bracing for a deluge of market moving events over the next several hours, with Eurozone economic data and the Bank of England (BOE) set to make headlines.
Beginning in order of appearance, IHS Markit will release several batches of euro area PMI numbers at the start of European trading. Composite PMI indicators will be presented for France, Germany, and the 19-member Eurozone.
At 08:00 GMT, the European Central Bank (ECB) will issue its Economic Bulletin, which is published two weeks after each Governing Council meeting. The ECB voted to leave monetary policy on hold last month, as officials continued to monitor strong economic progress.
Earlier this week, Eurozone second-quarter GDP came in at 0.6%, in line with forecasts and matching Q1’s solid expansion.
Data on retail spending will also make headlines at 09:00 GMT. Eurozone retail sales are forecast to rise 0.1% in June, which translates into year-over-year gains of 2.6%.
Attention shifts to the BOE at 11:00 GMT. Although the central bank is widely expected to keep interest rates on hold, investors will be keeping tabs on how many MPC members vote in favour of a hike. Three dissenters emerged at the June policy meeting. A similar number on Thursday will provoke fresh debate about the future of UK monetary policy. It could also stoke gains in the British pound, which is highly sensitive to monetary policy.
BOE Governor Mark Carney is scheduled to hold a press conference alongside the official policy statement.
North America will also see active trading, as market participants absorb fresh batches of US economic data. The Labor Department will report on initial jobless claims at 12:30 GMT. A short while later, IHS Markit and the Institute for Supply Management (ISM) will issue separate PMI gauges covering the US service economy.
Finally, the Commerce Department will report on factory orders at 14:00 GMT.
The euro broke through 1.19 US on Wednesday, raising both optimism and concern in the bull camp. Although the euro is backed by strong market forces, it may be rising too quickly, which leaves it exposed to a short-term correction. The EUR/USD was back down in the mid-1.18 region on Thursday. The pair faces immediate technical support at 1.1720.
The British pound preserved daily gains north of 1.32 on Wednesday, as investors turned their attention to the BOE. Investors can expect a huge pop in cable should three or more dissenters emerge from the BOE meeting. For now, the GBP/USD faces immediate resistance near Wednesday’s session high of 1.3245.
Gold prices pulled back sharply on Thursday amid a broad technical reversal. Bullion has made a valiant effort over the past four weeks but stumbled yet again as prices approached $1,280.00. The psychological $1,300.00 level remains elusive.