China GDP Sets The Stage For Monday Session

A light release schedule in Europe and North America on Monday will keep traders fixated on the latest batch of Chinese GDP figures, which came in better than expected.

The world’s second-largest economy expanded at an annualized 6.9% in the second quarter, unchanged from the previous three months, the National Bureau of Statistics reported Monday. Analysts in a median estimate called for a slight drop to 6.8%.

The Chinese economy has largely outpaced forecasts over the past year-and-a-half, as Beijing relies on traditional growth drivers to stay afloat. The growth rate is well within the government’s target range of 6.5% to 7% annually.

Separately on Monday, the Chinese government said retail sales rose 11% annually in June, compared to forecasts calling for 10.6%. Industrial production surged 7.6% year-over-year, up from 6.5% the previous month. Annual urban investment also clocked in at 7.8% in the first six months of 2017, official data showed.

Turning our attention to Europe, final CPI data will make headlines at 09:00 GMT. The Eurozone consumer price index (CPI) is forecast to come in at 1.3% annually in June, unchanged from the previous estimate. No other major European releases are scheduled for Monday.

In North America, the New York Federal Reserve Bank will release the Empire State manufacturing index for July. The monthly print is expected to weaken to 15.0 from 19.8 in June.

At the same time, the Canadian government will report on portfolio investment in foreign securities.

The Canadian loonie has been riding high since last Wednesday when the Bank of Canada (BOC) raised interest rates for the first time in nearly seven years. By doing so, the Canadian dollar spiked to more than one-year highs.

The US dollar, meanwhile, continues to trade near 11-month lows against a basket of world peers.

EUR/USD

The euro made another strong push toward new highs on Friday, as the EUR/USD pushed above the 1.1450 range. Higher highs are in play, with traders eyeing 1.15 over the short term and 1.1615 over the longer-term horizon. The latter represents the high from May 2016.

USD/CAD

The loonie ended the week in a tighter range after a massive 250-pip advance following the BOC decision. A dovish Federal Reserve is expected to keep the US dollar subdued for the foreseeable future. This gives the Canadian dollar further scope for acceleration as the domestic economy continues to gain traction. The USD/CAD is currently trading just above 14-month lows.  

GOLD

Precious metals staged a relief rally last week, with gold and silver finishing higher. The yellow metal has gained in seven of the last eight sessions, as bargain hunters swept in when prices were plumbing four-month lows. Gold’s range-bound nature will likely remain intact for the foreseeable future, as traders continue to pursue riskier trades.