A handful of second-tier releases failed to elicit a reaction from the markets overnight. Crude prices moved higher to surpass the $126 level overnight, pressuring the greenback. European trading will likely see economic data will take a back seat yet again. Barring wild deviations from expectations, price action is likely to take its cues from broad trends in dollar sentiment. The next major juncture in shaping the market’s outlook will be Tuesday’s FOMC release, with the majors following US equities and oil in the meantime.
Key Overnight Developments
• Australian House Prices Fall Less Than Expected
• Euro and Sterling Diverge in Overnight Trading
Critical Levels
The Euro moved higher overnight toward the 1.56 area. DailyFX Senior Currency Strategist Jamie Saettele reports the pair is poised lower below the 1.5283. Near-term support remains at 1.5569 with resistance at 1.5699. Sterling oscillated in a 30-pip range for most of the session but slipped lower below 1.5720 in late Asian trading. Support remains in the 1.9550-1.96 area, with near-term resistance at 1.9770.
Asia Session Highlights
A handful of second-tier releases failed to elicit a reaction from the markets overnight. Australian data printed to the upside, with the House Price Index falling less than the expected -1.3% to register at -0.3% in the second quarter. The markets failed to act surprised having seen New Home Sales surge higher last week as the mining boom stokes record immigration.
Metrics covering New Zealand wages in the second quarter printed largely in line with expectations. An uptick in Average Hourly Earnings failed to catalyze momentum. The data likely reflects workers’ demands for higher pay in the face of rising living costs (oil, food).
Euro Session: What to Expect
Economic data will likely take a back seat as other drivers dominate price action in European trading. Expectations that Switzerland’s SVME-Purchasing Managers Index will see business sentiment decline in July are likely to be validated: Switzerland depends on the European Union to absorb nearly 60% if all their exports and the recent downturn across the common market spells loss of revenue for Swiss firms. Last week’s ZEW Survey of analysts’ sentiment reinforces a downbeat tone: the metric underperformed substantially in July, printing at -76.9 versus -67.0 expected.
The remainder of the session brings Euro-Zone releases. First up, Sentix Investor Confidence is expected to print lower at -10 in August versus -9.3 in July. The metric dropped a whopping -276% in July alone, which either says the index is too volatile to be an accurate directional indicator or reveals an extreme swing in market sentiment. The reading has a -0.36 correlation with the EURUSD exchange rate since its creation in 2001, favoring the former scenario. Put simply, the markets will likely ignore this release. The session concludes with June’s Euro-Zone Producer Prices, with expectations calling for a print at 7.9%. The last two weeks saw substantial upside in PPI results for the EZ’s top 3 economies, pointing to the same for the regional release.
Barring wild deviations from expectations, price action is likely to take its cues from broad trends in dollar sentiment rather than the economic docket. The next major juncture in shaping the market’s outlook will be Tuesday’s FOMC release, with the majors following US equities and oil in the meantime.
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