General market theme
The lack of any fresh news or developments over the first 24 hours of this week meant limited price action in the major instruments we monitor in our daily report. Apart from fresh Manufacturing PMI data there was nothing to provide new stimulus to traders yesterday but as we move closer to this Friday’s Non-Farm Payrolls report this is expected to change and price action to pick up momentum. The most active instrument yesterday was the Pound that took to the downside as the Manufacturing data revealed fresh weakness in the sector that highlighted the consequences of the Brexit decision on the UK domestic economy. At the same time fresh bullish comments from Fed officials kept the Dollar bid for now but we will get a much clear outlook for the US currency after this month’s labor market report on Friday.
Price action highlights
The Euro traded sideways during the first 24 hours of the week as the fresh Manufacturing data showed a steady outlook for the European economy while the Dollar received some support from Fed commentary as we mentioned above. The Single currency is trading just shy of the 1.1200 level and for the time being it’s biding its time waiting for fresh stimulus to provide direction. Looking towards this Friday’s Non-Farm Payroll report we believe that the Euro could retain its gains should the Dollar appear fragile but a robust report could keep the US currency well-bid and trigger a correction in the Euro, however for the day ahead we don’t expect any serious price action.
The Cable looked to the downside yesterday when the Manufacturing PMI report revealed early signs of weakness in the UK economy after the UK took the decision to leave the EU. The manufacturing sector contracted over the past month and the domestic economy is taking the toll that an uncertain future brings along which in turn dragged the Pound below the 1.3200 support. Today the release of the Construction PMI data is expected to show a similar outlook and the Pound could extend its losses ahead of tomorrow’s Services report which is closely monitored by market participants.
Focus of the day
Apart from the Construction PMI report from the UK there are no other important reports scheduled for release this morning. Later in the day the release of the Personal Income and Spending figures from the US will give some fresh data to traders to digest but we don’t expect any significant price action on the back of these report s for the day ahead.
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