Global Data Flows Set To Drive Market Activity On Thursday

Economic data once again takes the spotlight on Thursday, with the United Kingdom and the United States drawing most of the headlines.

Action begins at 06:45 GMT with the French industrial output. The monthly report is expected to show a 0.5% decline in industrial production in June, following an increase of 1.9% in May.

A little more than an hour later, Italy will report on its global trade balance. Italy is the Eurozone’s third-largest economy.

The UK Office for National Statistics will unleash a torrent of economic data at 08:30 GMT, including manufacturing production, industrial production, and trade.

Industrial production – the widest measure of factory output – is forecast to rise 0.1% in June, translating into a year-over-year decline of 0.1%. Meanwhile, manufacturing output is forecast to flat-line compared to May and rise 0.6% year-over-year.

On the trade front, London’s goods deficit is forecast to narrow slightly to £11 billion in June from £11.8 billion the previous month.

In North America, the US Labor Department will report on producer inflation and initial jobless claims at 12:30 GMT. Producer prices rose 0.1% in July, based on a median estimate of economists. Meanwhile, weekly jobless claims are forecast to hold steady at a seasonally adjusted 240,000 for the period ended August 5.

In terms of monetary policy, Federal Reserve Bank of New York President William Dudley will deliver a speech at 14:00 GMT. The Federal Reserve’s policy-setting board will remain on the sidelines until September.

Commodity traders will be keeping a close eye on gold prices following a massive surge on Wednesday that was triggered by North Korea tensions. Gold futures are currently trading near two-month highs on the Comex division of the New York Mercantile Exchange. The US dollar index (DXY), meanwhile, is holding steady.

EUR/USD

The euro resumed its downward consolidation in mid-week trading, with prices falling nearly 150 pips from last week’s multi-year high. The EUR/USD exchange rate was down 0.2% overnight, where it faces immediate resistance near Wednesday’s low. On the other side of the spectrum, initial resistance is located at the 10-day simple moving average (SMA) of 1.1785.

GBP/USD

Like the euro, the British pound resumed its downward correction on Wednesday, with the GBP/USD briefly crossing below 1.30. Prices are down around 240 pips from last week’s high. The pair has broken the 20-day MA support, leaving it exposed to further downside risk in the short term.

GOLD

Bullion spiked 1.5% on Wednesday, reaching its highest level in nearly two months. The technical picture is bullish, but investors should remain extra cautious of price action the closer bullion approaches $1,300.00. That level has proven to be a formidable resistance all year long.