On Monday, despite the U.S. dollar rose vs. a basket of major currencies, recovering from a nine-month low, it remained shaky amid signs that several major central banks around the world are looking to tighten their monetary policy.
Today, traders are awaiting several reports including Construction Spending, ISM Manufacturing PMI, Final Manufacturing PMI, and ISM Manufacturing Prices. The major report is the ISM Manufacturing PMI, which is expected to come in at 55.0, up slightly from 54.9. Technically, a better than expected report should support the Greenback to hit new highs. Trading volumes are likely to fall off after the release of the economic data because of the U.S. Fourth of July bank holiday on Tuesday.
The Sterling pond settled at $1.30, staying close to six weeks high, as traders remained upbeat about the potential for a near-term rate raise from the Bank of England. Meanwhile, markets are awaiting the UK PMI data, which is expected to arrive at 56.4 versus 56.7 seen previously. Technically, Cable could extend retreat towards 1.2950 on soft UK PMI.
The euro returned some of its recent gains even with stronger than expected flash CPI readings. The headline figure dipped from 1.4% to 1.3% versus the 1.2% consensus while the core reading rose from 0.9% to 1.1% vs. the 1.0% estimate. German and French consumer spending numbers also turned out stronger than expected. Final manufacturing PMI readings and the region's unemployment rate are due today.
The yen was still the weakest in the bunch as Japanese inflation readings were weaker than expected. In particular, Tokyo's core figure was flat instead of posting the projected 0.2% uptick. Preliminary industrial production slumped 3.3% versus the projected 3.1% decline. Earlier today, the Tankan survey reported gains for both manufacturing and non-manufacturing sectors, although the latter came up short.
Gold prices declined after a surprise upbeat reading in the China Caixin PMI in June. The precious metal fell as much as 0.4% to $1,235.91 per ounce.
Oil Prices rose as drilling activity in the U.S. for new oil production declined for the first time for about 7 months, declining by two rigs. Despite the dip in U.S. drilling activity, the total rig count was still more than double the 341 rigs in the same week a year ago, according to energy services firm Baker Hughes Inc. U.S. (WTI) crude increased by 17 cents, or 0.4%, to settle at $46.21.
The most important economic events:
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.