GEOPOLITICS DOMINATE MARKET HEADLINES AMID SLOW START TO THE WEEK

Geopolitics are set to dominate the financial markets on Monday amid a dearth of economic data in Europe and North America.

Stocks are coming off one of their worst weekly performances of the year as North Korea tensions drove investors into the safety of precious metals. The Dow Jones Industrial Average, S&P 500 Index and Nasdaq Composite Index all fell more than 1% last week. Meanwhile, gold prices climbed toward $1,300.00 a troy ounce for the first time in around three months.

North Korea’s state-run newspaper said on Saturday that leader Kim Jong Un’s army is “capable of fighting any war the US wants.” The remarks came after a tit-for-tat between President Donald Trump and his North Korean adversaries that sent chills around the globe.

In terms of economic data, investors can expect a light schedule on Monday. Greece will report on second quarter gross domestic product (GDP) at 09:00 GMT. At the same time, the European Commission’s statistical agency will release June industrial production figures. Output is forecast to drop 0.5% from the previous month, which translates into a year-over-year gain of 2.8%.

No other data releases are scheduled.

Market participants will also be busy analyzing a deluge of Asian data on Monday. Earlier in the day, Japan said the economy expanded 1% in the second quarter, well above forecasts calling for a 0.6% increase. That translated into year-over-year growth of 4%. It was also the sixth consecutive quarter of expansion for the world’s third-largest economy.

In China, industrial production growth slowed sharply to 6.4% in the 12 months through July after climbing 7.6% the previous month, the National Bureau of Statistics reported. Retail sales were up 10.4% after rising 11% in June. Meanwhile, urban investment rose 8.3% annually in the January-July period.

EUR/USD

The EUR/USD is coming off another weekly gain, with prices closing well above 1.1800 on Friday. The pair was little changed at the start of the week. A close above 1.1850 will likely lead to a re-test of the yearly high north of 1.1900.

USD/JPY

Solid GDP data weren’t enough to lift the Japanese yen, which declined at the start of the week. The USD/JPY exchange rate was up 0.3% at 109.42. Despite the gain, the technical indicators appear to be losing upward strength. Investors can therefore expect stronger selling pressure to emerge as the pair rallies toward 110.00.

GOLD

Fear trade dragged gold prices sharply higher last week. The yellow metal is once again approaching a key technical barrier. The $1,300.00 level has proven to be a formidable resistance all year long. A clean break above this level would confirm the bullish signal and possible lead prices towards $1,325.00.