The economic calendar for Tuesday is light. The US factory orders are expected to have improved 5% in June versus 8% a month earlier on the back of renewed virus-containment measures and the European factory gate prices are expected to have risen 0.5% m-o-m in June from -0.6% printed a month earlier as a result of gradual winddown of confinement measures and economic normalisation.
The EURUSD consolidates near the 1.17 mark, but support at this level could easily give in if we see a further recovery in US dollar and drag the pair to 1.1630, minor 23.6% Fibonacci retracement on April – July rebound.
For Cable, there is probably little hope for an extended rally above the 1.30 mark given that the medium-term outlook remains comfortably negative on the bitter mix of pandemic and uncertain Brexit situation. The Bank of England (BoE) is expected to maintain its rate and asset purchases policy unchanged at this month’s meeting, but there is a chatter that moving toward the year-end, the bank should allow banks to borrow at negative rates, or increase the volume of funds available at the bank rate to further relax the financial conditions. Hence, the dominance of the BoE doves should put a decent downside pressure on sterling against the dollar and the euro.
Else, WTI crude finds buyers below the $40 per barrel on the back of promising manufacturing data, but the equilibrium is fragile near the current levels. Any deterioration in the risk appetite could rapidly tilt the balance to the downside and send the price of barrel tumbling below the $40 level.
