July 03 – Economic Events Outlook – Stronger Dollar In Play
Arslan Butt • 2 min read
What’s up, traders.
The Greenback is keeping the financial market instruments on their toes. The safe-haven asset gold dipped after the dollar began the third quarter on a positive note. There were three things that drove the market on Monday.
1) The U.S. is due to impose $34 billion of tariffs on Chinese exports on July 6, which is increasing tensions around the globe. Global stocks are trading under pressure over this.
2) No other economy but the USA is looking to hike the interest rate two times in 2018, perhaps in Sep and Dec. That’s what is making the Greenback a premium currency.
3) The buck got an extra boost after the Institute for Supply Management’s manufacturing index noted a reading of 60.2, higher than the market forecast of 58.2. Since it’s a survey of about 400 purchasing managers, it looks like they are pretty happy with the economic growth. By the way, the PMI figure above 50 represents an optimistic economy.
Watchlist – Top Economic Events to Watch Today
On Tuesday, we have a series of fundamentals but most of them are low-impact and may not cause fluctuations in the market.
GBP – Construction PMI – 8:30 (GMT)
This is a leading indicator of economic health. Companies respond promptly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy. This typically drives a 30 – 50 pips moment in the market.
Looking at the forecast, the constructions PMI is expected to rise from 52.5 to 52.6, with a slight gain of 0.1 points. I won’t be expecting much movement until and unless data deviates from the forecast at least by 2-3 points.
Considering the forecast, we can’t expect a sudden rise in Sterling as the PMI figures are compared with a benchmark of 50, over which the economy is considered to be growing. However, it will be exciting to trade any figure below 50 today.
EUR – Retail Sales m/m – 9:00 (GMT)
This shows a change in the total value of inflation-adjusted sales at the retail level. As per economists’ forecast, the retail sales are expected to rise by 0.1% vs. 0.1% beforehand.
However, this figure tends to have a relatively soft impact because Germany and France, which account for about half of the Eurozone’s economy, release their consumer spending data sooner.
USD – Factory Orders m/m – 14:00 (GMT)
The Census Bureau will release the U.S. factory orders with a forecast of 0.1% compared to a -0.8% drop last month. Factory orders do impact dollar and crude oil both, as the weaker factory orders mean the companies will lower the demand for crude oil. Good luck for today!