Data, FOMC Drive Headlines Tuesday

A steady stream of market-moving events is expected Tuesday, with North America seeing the bulk of the releases. However, several European reports will also make headlines ahead of the New York session.

The European data wire begins at 06:00 GMT with German import prices, which are a key inflation metric. Forty-five minutes later, France’s INSEE will release its monthly business climate survey for September.

Action continues at 08:00 GMT with the Italian trade balance, followed by the British Bankers Association (BBA) monthly report on mortgage approvals at 08:30 GMT.

European Central Bank (ECB) official Peter Praet will deliver a speech at 12:00 GMT. Praet has been a member of the Executive Board since 2011.

Shifting gears to the United States, the S&P/Case-Shiller Home Price Index is scheduled for release at 13:00 GMT.

The Commerce Department’s new home sales report is due one hour later. The sale of new homes is forecast to rise 3.3% to a seasonally adjusted annual rate of 585,000 in August.

Later in the session, the Federal Reserve Bank of Richmond will unveil its September manufacturing index.

On the policy circuit, a parade of Fed speakers will deliver speeches on Tuesday, including Chairwoman Janet Yellen. Her speech follows public remarks by Federal Open Market Committee (FOMC) members Loretta Mester and Lael Brainard.

The FOMC voted last week to hold interest rates at 1.25%, but signaled that one more upward adjustment is likely this year. The Fed also penciled in October as the start of its balance sheet reduction program.

The US dollar will be highly sensitive to monetary policy on Tuesday. The greenback shot up half a percent at the start of the week after New York Fed President William Dudley said interest rates are on track to rise gradually.

EUR/USD

The euro nosedived on Monday alongside other dollar rivals. The EUR/USD touched a session low of 1.1841 on Monday, which would have been enough for a more than one-month low. The pair was last up 0.1% at 1.1860. The pair faces a key trend channel support around 1.1825.

GBP/USD

Cable has declined roughly 100 pips from Friday’s close as part of a broad retracement following fresh multiyear highs. The GBP/USD rebounded in early Tuesday trading to reach 1.3482. From a technical perspective, the 1.3443 region remains a strong support level for cable. On the opposite side of the ledger, strong resistance is seen at 1.3580.

GOLD

Gold prices rebounded sharply on Monday, rising in lockstep with the US dollar. Spot prices are back above $1,300.00 a troy ounce after a multi-week retracement sent the bulls packing. Bullion faces a major support zone at around $1,287.00. Below that level, the metal is likely supported until $1,267.00. Traders should carefully monitor risk sentiment in the financial markets for a directional play on gold.