Economic data and monetary policy headline a highly active week in the financial markets. On Monday, attention turns to the eurozone.
Action begins at 08:30 GMT with reports from the United Kingdom covering net lending to individuals, consumer credit and mortgage approvals. Pound traders are in for an active week as the Bank of England (BOE) looks poised to raise interest rates to their highest level in a decade.
The European Commission’s statistical agency will release a batch of sentiment indicators Monday. Business climate, economic sentiment, industrial confidence, service sentiment and consumer confidence are all scheduled for release at 09:00 GMT. The gauges on business climate and services sentiment are forecast to rise in July. The other indicators are projected to either hold steady or decline slightly.
Germany, Europe’s largest economy, will release its latest consumer price index (CPI) at 12:00 GMT. July consumer prices are forecast to rise 0.4%, which translates into a year-over-year gain of 2.1%. Germany’s harmonised index of consumer prices (HICP), which calculates inflation via eurozone methodology, likely rose 2.1% annually.
Shifting gears to the United States, the National Association of Realtors (NAR) will report on pending home sales at 14:00 GMT. The pending home sales index, which is a forward-looking indicator of closings, is forecast to rise 1.1% in June. However, in annualised terms, that translates into a 6% drop.
Thirty minutes later, the Federal Reserve Bank of Dallas will produce the manufacturing business index for the month of July. The gauge is forecast to decline sharply to 23.7 from 36.5 in June, signaling a sharp slowdown in regional business activity.
Europe’s common currency is coming off a turbulent week that saw prices swing from multi-week highs to more than one-week lows. At the time of writing, EUR/USD is trading at 1.1657, where it was relatively unchanged. From a technical point of view, the pair faces immediate support at 1.1620, followed by 1.1590. On the opposite side of the spectrum, resistance is likely found at 1.1720, followed by 1.1750.
Like the euro, cable downshifted at the end of last week as the dollar regained momentum against a basket of its peers. GBP/USD now sits just above 1.3100 but could be poised to continue higher this week as the BOE gets ready to raise interest rates. The BOE has been one of the slowest central banks to normalize monetary policy after more than a decade of stimulus.
Since plunging more than 2% in the span of three days, the USD/JPY exchange rate has shown signs of stabilizing. The pair is currently trading just above 111.00 ahead of the Bank of Japan policy decision later in the week. Immediate resistance is likely found at 111.40. On the flipside, the first support cluster is located at 110.55.