ECONOMIC DATA IN THE SPOTLIGHT ON MONDAY
A steady stream of economic data will make headlines on Monday, kicking off a highly active week in the market. Economic figures from both sides of the Atlantic are expected at the start of the week, which should give traders plenty of opportunity to enter the market.
The European data wire begins at 07:15 with manufacturing PMI data for Spain. Over the next two hours, IHS Markit will release final PMI figures for Germany, the United Kingdom, France, Italy and the broader Eurozone.
Meanwhile, the European Commission’s statistical agency will release August unemployment numbers. The jobless rate is forecast to slide to 9% in August from 9.1% the previous month.
In North America, the Institute for Supply Management (ISM) will release US manufacturing PMI at 14:00 GMT. The closely watched report is expected to show a slight cooldown in factory activity at the end of the fourth quarter.
In terms of monetary policy, Federal Open Market Committee (FOMC) member Robert Kaplan will deliver a speech at 18:00 GMT.
The US dollar rose against a basket of global competitors on Monday, as positive momentum returned to the world’s most actively traded currency. The dollar index (DXY) was up 0.3% at 93.36 in Asian trade.
The euro resumed its descent on Monday, as the dollar regained its momentum. The EUR/USD exchange rate was trading near session lows near 1.1780, having declined 35 pips from the prior close. The pair managed to correct around half of its weekly losses on Friday. However, the near-term outlook remains tilted to the downside as the common currency awaits fresh trading catalysts in the form of economic data and monetary policy.
The USD/JPY advanced to two-and-a-half month highs on Monday, as risk appetite continued to weigh on the Japanese yen. The pair reached a session high of 112.91 in Asian trading before consolidating near 112.81. That represents a gain of 0.3%. Technical indicators have eased off oversold levels, a sign that the bulls continued to lead the market. Upside should remain intact insofar as price action remains above the 100-day simple moving average, which is currently situated at 111.10.
Gold prices have been in a perpetual state of decline for the past three weeks. After a sharp rally last Monday, prices resumed their descent to reach one-month lows on the Comex division of the New York Mercantile Exchange. Spot gold was down 0.3% on Monday to trade around $1,275.00 a troy ounce. Bullion is approaching oversold territory on the 15-minute Relative Strength Index (RSI). The MACD is also trekking in negative territory, confirming the sell signal. These data points suggest that the bears remain in firm control of the near-term outlook.