DATA DUMP CONTINUES THURSDAY WITH EUROZONE, US RELEASES
Investors got their fair share of economic data releases on Wednesday, but the deluge will continue in the latter half of the week with headlines from both sides of the Atlantic.
The economic calendar heats up at 08:30 GMT when the Office for National Statistics reports on UK retail sales. Receipts at retail stores rose 0.2% in July and 1.4% annually, according to a median estimate of economists. Excluding fuel, sales are also expected to rise 0.2% on month.
A half hour later, the European Commission’s statistical agency will release its final estimate of July consumer inflation. The consumer price index (CPI) is forecast to decline 0.5% in July, translating into a year-over-year reading of 1.3%.
Eurostat will also release July trade data at 10:00 GMT. The trade surplus is forecast to widen to €22.9 billion in July from €21.4 billion the previous month.
Shifting course to the United States, initial jobless claims and the Philadelphia Fed Manufacturing Survey will make headlines at 12:30 GMT. Just over an hour later, the Federal Reserve will release its monthly report on industrial production. The Fed’s broadest measure of factory output is forecast to climb 0.3% in July following a 0.4% increase the prior month. The capacity utilization rate is expected to edge up slightly to 76.7% from 76.6%.
From a geopolitical perspective, investors are also monitoring the renegotiation of the North American Free Trade Agreement (NAFTA) between the United States, Canada and Mexico. The Trump administration came out swinging on day one, a sign that the renegotiation process will be a highly contentious one.
The euro generated some support on Wednesday, but remained well below yearly highs. The EUR/USD exchange rate is hovering near 1.1780. From a technical perspective, the pair is looking to test the 1.1785 resistance. A break above this level would expose the 1.1815 region. On the opposite side of the spectrum, immediate support is located at 1.1720.
The British pound overtook 1.2900 US on Thursday, but continued to trade well below its previous highs. Cable will look to economic data for momentum on Thursday, with retail sales providing the catalyst. Analysts say the GBP/USD faces limited upside momentum, as the market continues to show a sharp bearish slope. Immediate upside is capped around 1.2930. Support is located at 1.2830.
Gold prices bounced back on Wednesday, as the US dollar weakened against a basket of global rivals. The dollar’s decline was partially attributed to a mixed reading of the July FOMC minutes, which signaled growing divergence about the future of monetary policy. Gold prices approached $1,290.00 a troy ounce in Asian trading. The yellow metal faces a critical resistance level at $1,300.00.