ECONOMIC DATA IN FOCUS AS JULY DRAWS TO AN END

Traders will have their work cut out for them on Monday, as a deluge of economic data make their way through the financial markets.

Action begins at 06:00 GMT with a report on German retail sales. As Europe’s largest economy, Germany has a major influence on the financial markets, especially the euro. Receipts at German retail stores are forecast to climb 0.2% in June and 2.7% annually.

Two hours later, the Italian government will release its latest unemployment report. The national unemployment rate is forecast to hold steady at 11.3%.

At 08:30 GMT, the Bank of England (BOE) will report on consumer credit and net lending to individuals – two data sets that could impact the British pound.

A half hour later, the European Commission’s statistical agency will report on June unemployment and July inflation. The unemployment rate is forecast to dip to 9.2% from 9.3% in May. Meanwhile, CPI inflation is expected to hold steady at 1.3% year-over-year. So-called core inflation, which strips away volatile goods such as food and energy, is expected to come in at 1.2%.

In North America, the National Association of Realtors (NAR) will report on pending home sales for the month of June. Separately, the Federal Reserve Bank of Dallas will issue its monthly manufacturing business index.

Earlier in the day, China released its official manufacturing and non-manufacturing PMIs for the month of July. Both indicators softened from June but continued to show steady economic growth.

EUR/USD

The euro secured its first weekly close above 1.1700 US since January 2015, as the combination of technical and fundamental forces propped up the common currency. The EUR/USD was down 0.2% at the start of European trade, but remains well supported above 1.1700. From a technical perspective, the pair continues to exhibit a strong bullish bias. The daily chart is pointing to a possible test of the 1.18 level. On the downside, technical resistance comes at 1.1710, followed by 1.1612.

GBP/USD

The British pound tested year-to-date highs last week by climbing back above 1.31 USD. Cable is moving with bullish bias, with price looking to set new yearly highs. Traders should be cautious when entering cable given the underlying uncertainty surrounding Brexit. All eyes are on this week’s BOE rate decision. A divided central bank may signal for a rate hike much sooner than previously expected.

GOLD

Gold prices finished sharply higher on Friday, as the US dollar continued to backtrack against a basket of world currencies. Bullion is trading at multi-month highs, although price action continues to be limited by a strong technical barrier ahead of $1,300.00. That level remains elusive for the time being, given the much weaker inverse relationship between gold and the dollar in recent months.