News

Euro Extends Losses Ahead of Data

EUR

The Euro extended losses against rivals ahead of key economic data. Market participants await the preliminary reading of the Manufacturing and Services PMIs to have clues about the recent performance of the European economies, especially that the data will be coming out ahead of the European Central Bank monetary policy meeting which is taking place tomorrow. Investors expect the ECB to announce monetary policy easing measures that would support the slowing economy. The EURUSD tumbled to a two-month low of $1.1140, and the EURJPY plunged to 120.46, the lowest since early January.

USD

The dollar continued to benefit from the falling European currencies where the dollar index which measures the greenback against a basket of major currencies edged to 97.76, the highest since June 18th. Despite the high expectations of an interest rate cut by the Federal Reserve in the coming monetary policy next week. The US economy is still solid compared to other major economies, which could give more room to the Fed to act slowly, while other central banks could be forced to act fast and aggressively which would be supportive to the dollar. The recent drop in Euro due to the worsening economic outlook and the rising chances of hard Brexit as Boris Johnson comes to office contributed fresh demand to dollar safety. The USDJPY inched higher to 108.30, and the GBPUSD drifted lower to $1.2430.

Metals

The price of a gold ounce continued to trade in a tight range between a support level of $1414, and a resistance level of $1430 awaiting fresh fundamental drivers. The yellow metal is up more than 10% on the year supported by the prospects that Central Banks are moving towards easing their monetary policies. The price of a silver ounce is hovering near a one-month high at $16.54, while palladium held steady above $1520.

Oil

Oil prices edged higher supported by the escalating geopolitical tension and a decline in US oil inventories. The recent incidents that took place in the Gulf raised the tension between Iran, and both the United States and the United Kingdom. The United Kingdom has a plan of a European-led naval mission to ensure the safety of oil shipments through the Strait of Hormuz, which could lead to further incidents in the future. On the other hand, the American Petroleum Institute reported a drop of 10.961 million barrels in US oil stock last week. The US Energy Information Administration will report the official numbers later today. The West Texas Intermediate crude futures rose to $57.42, and Brent futures rallied to $64.42.

Major Economic Events

GMT Country Event Expectation Previous

7:30

EU

German Manufacturing PMI (Jul) 

45.1

45

7:30

EU

German Services PMI (Jul) 

55.3

55.8

13:45

US

Manufacturing PMI (Jul) 

51.0

50.6

13:45

US

Services PMI (Jul) 

51.7

51.5

14:00

US

New Home Sales (Jun)

6.0%

-7.8%

14:30

US

Crude Oil Inventories

-4.011

-3.116


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