The U.S. Dollar traded mixed against its Forex counterparts subsequent to the release of solid numbers denoting improvements for Manufacturing and the Property market. The greenback was impacted by a hike in risk aversion brought on by mounting violence in Iraq and the likelihood that the U.S. could be dragged into the situation once again. The greenback slumped despite positive news indicating that Manufacturing activities expanded at the quickest pace in four years in June. Markit Economics revealed that the activities index came in at 57.5 this month, after printing at 56.4 in May. Other news revealed that the number of Existing Home Sales went up by 4.9 percent, the quickest in almost seven months. In the meantime, speculators opted for Gold as an alternate investment as risk appetite waned in the market. Futures for August delivery slumped to $1.315.60 a troy ounce on the Comex Division of New York’s Mercantile Exchange, but are anticipated to rebound as the violence in Iraq and tensions in the Ukraine fuel demand for harbor assets. The announcement of positive housing metrics out of the U.S. limited the precious metal’s rebound, especially since speculators were reminded of the fact that the Federal Reserve will continue to wind down its stimulus program, a factor that normally impacts the value of the shiny metal.
The Euro remained slightly to the downside against the U.S. Dollar even though the European Central Bank’s President, Mario Draghi, reiterated the bank’s pledge to bolster economic growth and fight the deflationary pressures. The Euro remained fragile after France, the E.U.’s second biggest economy, revealed another decline in the Manufacturing and Services sectors. The British Pound dipped slightly against the greenback subsequent to news denoting growth in the U.S. Manufacturing activities and increases in Existing Home Sales. However, hopes that the Bank of England will entertain the idea of higher interest rates supported the Sterling.
The Yen slipped against the Euro and the U.S. Dollar as investors remained uncertain over the full effects of Abenomics. However, the Yen’s losses were capped as domestic reports pointed to the first positive report on Flash Manufacturing PMI in three months, reflecting growth.
Lastly, in the South Pacific, the Australian and New Zealand Dollars traded strongly against their U.S. peer after China indicated that the Manufacturing sector signaled growth for the first time since December, and best of all, the numbers rose into the expansion territory.
EUR/USD- PMI Data Impacts Euro
The EUR/USD slumped after the PMI metrics reached the wires, prompting concerns that the economy of the Euro monetary bloc is cooling off. The Euro has remained under pressure since the European Central Bank indicated that it is willing to do whatever is necessary to bolster economic growth and fight the possibility of deflation. The EUR/USD slumped slightly as geopolitical tensions have provided the U.S. monetary unit with support. Analysts hop that new data out of Germany may boost the EUR/USD.
GBP/USD- Sterling Stalls
The GBP/USD’s rally came to a halt after the U.S. provided positive reports on the sale of Existing Homes. But its drop was not substantial, as market speculators still believe that the Sterling could sustain another advance. The GBP/USD surged to the highest rate in five years on speculation that the British economy will show further signs of improvement. This week, the U.K. is forecast to report that its economy expanded 0.8 percent in the first three months of the year, a factor that could propel the British Pound to a new high.
EUR/JPY- Tensions Support Yen
The EUR/JPY gave up gains after lackluster economic reports reignited concerns over the possibility that the European economy could be losing momentum. Meanwhile, in Japan, domestic releases surprised by showing that the Manufacturing PMI came in at 51.1; this was the first positive announcement from the sector in three months. The EUR/JPY slipped as demand for safety rose in the Forex on account of the fact that insurgents from the denominated group ISIS seized the borders with Syria and Jordan. The trading markets worry that the violence could spread to the South where the Country’s oil is found.
AUD/USD- Aussie Still Strong
The AUD/USD remained strong after China reported that its Manufacturing index moved onto the positive territory, with a reading of 50.8, beating forecasts for a hike to 49.7. The upbeat fundamentals prompted the AUD/USD to rally to more than a two month high. Meanwhile, officials from the Reserve Bank have suggested that the central bank will not be following in the footsteps of other banks since the Aussie economy is not in need of a higher interest rate.
Today’s Outlook
Today’s economic calendar shows that the U.S. will report on Durable Goods and Core Durable Goods Orders as well as on GDP. The U.K. will issue data on the CBI Distributive Trade Survey. And Switzerland will release the Consumption Indicator.