Euro, Pound Likely To Draw Bids Ahead Of Data Releases

Tuesday is expected to be a much more active day in the financial markets, as traders assess a fresh batch of inflation and confidence data from the United Kingdom and Germany.

Action begins at 08:30 GMT when the UK Office for National Statistics releases several batches of inflation data for the month of June. This includes the retail price index, producer price index (PPI) and consumer price index (CPI).

Retail prices are forecast to rise 0.3% compared to May and 3.7% annually.

Producer inflation, which gauges prices paid at the factory-gate level, is expected to rise 3.3% annually.

Headline CPI is expected to climb 0.2% for the month and 2.9% annually. So-called core inflation, which strips away food and energy costs, is projected to rise 2.6%.

Shifting gears, the Centre for European Economic Research (ZEW) will report on German business confidence for the month of July. The assessment of the current situation is forecast to hold steady, while the barometer of economic sentiment is expected to dip slightly.

The euro area economic sentiment indicator is also projected to decline slightly.

In North America, the US Department of Labor will release the export and import price indexes at 12:30 GMT. The data could provide fresh information about inflation, but are unlikely to move the markets in a meaningful way.

The US dollar is trading at ten-month lows against a basket of major currencies. The dollar has fallen more than 7% against world rivals this year, making it one of the worst-performing currencies.

A weaker dollar has enabled precious metals to stage a modest recovery over the past ten days, with gold prices climbing to two-and-a-half week highs.

EUR/USD

It was full steam ahead for the euro on Monday, as prices clocked in above 1.15 US. The EUR/USD was last up 0.4% at 1.1530, its highest level in 14 months. The pair is now eyeing the May 2016 high of 1.1615. Beyond that level, prices could extend toward the August 2015 high of 1.1713.

GBP/USD

Cable has risen sharply at the start of the week to trade just below 1.31 – it’s highest level in ten months. A broad reversal in the dollar is expected to keep the GBP/USD on a firm uptrend, with prices eyeing the 1.3170 resistance area. That level corresponds with the 61.8% Fibonacci retracement.

GOLD

Gold prices are trading at their highest level of the month, having gained in six of the last seven sessions. The spot price was last seen hovering below $1,238.00 a troy ounce. The yellow metal is looking at the $1,240 and $1,246 region as the next potential zone of resistance. A weaker dollar is expected to keep precious metals trekking higher in the immediate term.