UK DATA IN THE SPOTLIGHT ON TUESDAY
The UK government was dealt a major blow last week after Brexit Secretary David Davis resigned from his post. The fallout from the resignation will remain in the spotlight ahead of a deluge of economic reporting from Europe’s second-largest economy.
Italy will kick off the reporting schedule at 08:00 GMT with its latest industrial output figures. Industrial production is projected to grow 0.8% month-on-month and 2.4% annually in May.
From there, the United Kingdom’s Office for National Statistics will take over with a flurry of data releases, including industrial production, manufacturing production, trade and gross domestic product (GDP).
Industrial production is forecast to grow 0.5% in May, translating into a year-over-year gain of 2.7%. Manufacturing production, which is a narrower slice of industrial output, is projected to rise 0.7% over the month and 2% annually.
London’s goods trade deficit with the rest of the world is projected to narrow to £11.95 billion for May compared with £14.03 billion the month before.
The report on GDP, which covers the month of May, will likely show a growth rate of 0.3%, according to a median estimate of economists.
Shifting gears to the Eurozone, the Centre for European Economic Research (ZEW) will report on institutional investor sentiment for Germany and the broader currency bloc. The economic sentiment indicator for both jurisdictions is forecast to weaken for July.
Earlier in the day, the Chinese government released a pair of inflation reports that caught investors’ attention. The consumer price index (CPI) fell 0.1 in June, which translated into a year-over-year gain of 1.9%. The producer price index (PPI), which captures inflationary trends at the factory fate level, rose 4.7% annually for June compared with 4.1% the month before.
After testing the 1.1800 handle, Europe’s common currency swung lower against the dollar on Monday. At the time of writing, EUR/USD was back to trading in the mid-1.1700 region. From a technical perspective, the pair continues to face firm resistance north of 1.1800. On the opposite side of the ledger, 1.1737 offers interim support.
Cable also took a turn for the worse on Monday following Brexit Secretary David Davis’ resignation. GBP/USD traded as high as 1.3358 before plunging nearly 150 pips. At the time of writing, the pair was trading around 1.3250. The neutral to bearish trend points to immediate support at 1.3250, which is the high from 4 June. Below that level, 1.3200 provides the next layer of protection.
The Canadian dollar also drifted lower against its US counterpart on Monday, as the USD/CAD reclaimed the 1.3100 level. USD/CAD is currently trading at 1.3113. The pair faces immediate support at 1.3035; on the opposite side of the ledger, the first barrier is likely found around 1.3145.