PMI DATA ON TAP AHEAD OF US INDEPENDENCE DAY

A deluge of economic data will make its way through the financial markets Monday, giving traders a fresh look at the US and Eurozone economies ahead of America’s Independence Day holiday.

The purchasing managers’ index (PMI) tracks the performance of national and regional economic trends through the lens of manufacturing and services companies. Beginning at 07:45 GMT, IHS Markit will release PMI data for Italy, France, Germany and the Eurozone. A separate batch of PMI data for the United Kingdom will also be issued.

Eurozone manufacturing PMI is forecast to hold steady at 57.3, signaling strong expansion in the region’s factory sectors.

Other European data releases on Monday include Swiss retail sales and euro area unemployment. The Eurozone unemployment rate is forecast to fall to 9.2% in May from 9.3% previously, according to a median estimate of economists.

Traders can expect a pair of US manufacturing PMI reports from Markit and the Institute for Supply Management (ISM) on Monday. The ISM report is the more closely watched of the two. It is expected to show another month of solid expansion for domestic manufacturers.

Later in the day, the US Commerce Department will report on construction spending, which has a direct impact on the residential housing sector.

The energy markets were off to a strong start on Monday, as oil prices continued to rebound from 2017 lows. Crude prices were headed for an eighth consecutive advance, with the US futures contract trading near three-week highs.

Trading volumes will decline on Tuesday as US traders pause for Independence Day celebrations.

EUR/USD

The euro is coming off a stellar week of gains that saw prices surge to 14-month highs. The EUR/USD exchange rate continues to trade well above 1.14 as market participants feed off hawkish commentary from European Central Bank (ECB) officials. Immediate support levels are likely to be found at 1.1380, followed by 1.1345. On the opposite side of the spectrum, immediate resistance is located around the 1.1450 range.

GBP/USD

Like the euro, pound sterling is also coming off a solid week of gains. Cable is presently holding the 1.30 level. The GBP/USD could face renewed upside this week as traders feed off comments from Bank of England (BOE) Mark Carney, who only last week left the door open to raising interest rates.

WTI OIL

There appears to be little stopping US crude prices at the moment. The eight-day rally could be poised to test the 6 June high above $48.00 a barrel. However, prices are likely to face downward pressure the closer they converge on the $50 a barrel mark. Traders should, therefore, monitor ongoing developments in the market, including output levels of OPEC producers Libya and Nigeria.