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Monday, July 3rd
The EUR/USD pair extends its downside correction from its 3-month highs, having broken through resistance, located at 1.14 level, as bulls have taken a breather ahead of eventful week. Moreover, the greenback is trying hard to regain its position after broad retreat across the market, as traders are waiting for FOMC Meeting Minutes, which expectedly will hint on better inflation growth pace later this week. Adding to this, slightly better risk-on sentiments, triggered by green numbers of Chinese Caixin Manufacturing PMI, are also negatively affecting the pair this Monday. Now immediate focus shifts towards the bloc of Manufacturing PMIs from Eurozone, featuring German and global EU reports, while the US ISM Manufacturing PMI data will also be able to bring some impetus to the pair in the NA session.
The GBP/USD pair retreats from its 6-week highs, posted at 1.3030 last Friday, reversing part of its gains after 4-day winning streak and falling below its key support level of 1.3000. Seems that recovery of the US currency remains the main driving factor across the market, pushing the pair in the north direction, despite of improved risk appetite, triggered by upbeat Chinese manufacturing data. However, it is expected that pound’s upside rally is not over yet, backed by hawkish remarks of the BoE Governor Mark Carney, who noted the Bank could remove some of the current stimulus, as today we will again hear speeches of the BoE representatives – M.Carney and BoE’s Chief Economist A.Haldane. Adding to this, today investors will also focus their attention on manufacturing PMIs from both sides, which will also be able to shape up pair’s further direction.
The AUD/USD pair failed to benefit from better-than-expected Caixin Chinese PMI, which in turn boosted demand for risky assets, such as the Aussie, as weak data from the Australian housing market slowed down AUD bulls. Moreover, softer tone on the commodity market, featuring retreat of the copper, is also negatively affecting the pair at the beginning of this week. It is expected that today the pair will continue to extend its mild bearish bias, as recovery of the US dollar and cautious tone of the market ahead of RBA interest rate decision, which is scheduled on the next Asian session, will keep the pair under the pressure throughout this Monday. Besides Australian cash rate decision, investors will also look forward to the ISM Manufacturing PMI report to gain some pips in the NA session.
After having witnessed a bearish opening gap, the USD/JPY pair is navigating in the north direction at the start of this week, trying to retake last week highs, located 112.93 spot. Seems that the market remained unimpressed with mixed data from Japanese manufacturing sector, providing no support to the yen. Adding to this, slight recovery of the US dollar against its main competitors, backed by market expectations of hawkish hints from FOMC Meeting Minutes, which is due on cards later this week, and better risk-on tone are also supporting the pair this Monday. Looking ahead, today market participants will focus their attention on manufacturing data from the US, which will be able to bring fresh trading opportunities during the NA session.
The main events of the day:
UK Manufacturing PMI – 11.30 (GMT +3)
BoE Governor M.Carney’s speech – 15.00 (GMT +3)
US ISM Manufacturing PMI – 17.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1366 R. 1.1472
USDJPY S. 111.35 R. 113.11
GBPUSD S. 1.2914 R. 1.3086
USDCHF S. 0.9532 R. 0.9624
AUDUSD S. 0.7644 R. 0.7734
NZDUSD S. 0.7267 R. 0.7377
USDCAD S. 1.2907 R. 1.3037
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