PMI DATA ON TAP AHEAD OF ACTIVE WEEK IN THE MARKET
Multiple PMI reports will make headlines on Monday, giving investors the latest glimpse into the health of the Eurozone and US economies.
Action begins at 07:00 GMT with a report on France’s manufacturing and services sectors. Market’s France Composite PMI, which tracks both manufacturing and services activity, is forecast to soften slightly to 54.6 in July.
In the next hour, Markit will report on German and euro-wide PMI. Germany’s Composite index is forecast to weaken slightly to 56.3 from 56.4. The Eurozone Composite reading is expected to come in at 57.2.
PMI data will continue in the North American session, with Markit reporting on the US manufacturing and services sectors. Both segments of the economy are forecast to grow at a slightly faster pace this month.
Meanwhile, the National Association of Realtors (NAR) will report on US existing home sales at 14:00 GMT. The sale of previously-owned homes is forecast to drop 1.2% to a seasonally adjusted annual rate of 5.57 million. Existing sales rose 1.1% the previous month.
Market-moving events will continue for the rest of the week, with the US Federal Reserve scheduled to begin its two-day policy meeting on Tuesday. On Friday, the Commerce Department will issue its preliminary estimate of second quarter GDP growth.
The US dollar fell to fresh 11-month lows last week, as traders maintained their bearish outlook on the world’s largest economy. The dollar index (DXY), which tracks the performance of the greenback against a basket of six currencies, settled at 93.96 on Friday. It has declined more than 8% since the start of 2017.
A weaker dollar has triggered a broad rally in precious metals, with gold prices trading at more than one-month highs.
The euro’s bullish uptrend accelerated last week, with the EURUSD pushing toward the 1.17 level. The pair is trading at multi-year highs, but risks a sharp pullback as it enters overbought territory. Nevertheless, the outlook on the euro remains extremely bullish on a stronger domestic economy and increasingly hawkish central bank.
The Canadian dollar has been one of the better-performing currencies as of late. Like the euro, it too is benefiting from a stronger economy. With the Bank of Canada (BOC) widely expected to raise interest rates again this year, the USD/CAD exchange remains vulnerable to lower lows. The pair is supported at the psychological 1.25 level.
Gold broke sharply to the upside last week, with the spot contract trading at one-month highs. Bullion has gained in eight of the last ten sessions, as prices bounced from four-month lows. Traders are likely to buy the dips in the short term, which should keep prices well supported above $1,200.00 a troy ounce.