:
- French Manufacturing PMI (FRA, 07:00 GMT)
- German Manufacturing PMI (GER, 08:00 GMT)
- Manufacturing PMI (EU, 09:00 GMT)
- BBA Mortgage Approvals (GB, 09:30 GMT)
- Core Retail Sales (MoM) (CAN, 13:30 GMT)
- Fed Chairman Bernanke Speaks (U.S, 13:45 GMT)
According to an article published by Bloomberg News, the Federal Reserve Chairman Ben S. Bernanke may hit an obstacle as he considers whether more bond purchases are needed to spur growth: owning too much. Purchasing too many Treasuries may “have a serious long- term effect on the market,” Sheets, who until last August was the Fed’s top international economist, said in a phone interview. “The Fed implicitly has a mandate for financial stability, and as part of that they’re concerned about ensuring the functioning and integrity of financial markets.”
China’s manufacturing may contract at a slower pace in July after two interest-rate cuts and a rebound in lending spurred demand in the world’s second-largest economy, a private survey indicated. The preliminary reading was 49.5 for a purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics.
Germany, the Netherlands and Luxembourg had the outlooks for their Aaa credit ratings lowered to negative by Moody’s Investors Service, which cited “rising uncertainty” about Europe’s debt crisis. Risks that Greece may leave the 17-nation euro currency and “increasing likelihood” of collective support for European countries such as Spain and Italy were among reasons for the change, Moody’s said yesterday in a statement.
Europe was plunged into fresh market turmoil as the first call for bailout aid by a Spanish region sent borrowing costs surging, while Spain and Italy reinstated a ban on betting on stock declines. Stocks and the euro fell as Catalonia joined a list of Spanish regions that may tap aid from the central government, spurring 10-year yields to rise to a euro-era record.
EUR/USD: The EUR/USD was trading slightly higher at 1.21238 at the time of writing on market corrections after touching a two-year low on fears the European debt crisis is intensifying. The pair is likely to fluctuate within the resistance level of 1.21556 and the support level 1.20672 ahead of data on manufacturing and service-sector activity in the Eurozone as well as Germany and France own individual reports on the European session. In addition, eyes will be on Spanish sovereign short term deb auction selling 3-6 month bills. Later in the day, the Federal Reserve Chairman Ben Bernanke will speak; his comments will be closely watched for clues to the possible future direction of monetary policy. The U.S. will also unveil preliminary data on manufacturing activity. Market sentiments remain weak on the EUR, thus investors should be very cautious when dealing with the EUR/USD. A wait and see approach will be a good strategy on the pair.
USD/CAD: The USD/CAD was trading lower at 1.01816 at the time of writing on market corrections after the USD increased to a more than one-week high against the Canadian dollar on Monday. The pair is likely to fluctuate with the resistance level of 1.02016 and the support level of 1.01611 ahead of the economic data in the Eurozone. The risk events for the pair will be the Core Retail Sales (MoM) data in Canada at 13:30 GMT and the Fed Chairman Bernanke Speech at 13:45 GMT. The Core Retail Sales (MoM) data is expected to arrive at 0.2% compared to -0.3% registered previously. A higher than expected reading should be taken as bullish for the CAD, while a lower than expected reading should be taken as bearish for the CAD. Investors should remain prudent and wait for economic data and the latest news in the Eurozone, Canada and the U.S to come on market to get visibility on the USD/CAD.
Oil (WTI): The price of oil was up in Asia, at 88.770 at the time of writing on market after a Chinese manufacturing index signaled an economic slowdown may be easing in the world’s second-largest crude user and on fears the European debt crisis will continue to intensify and crimp demand for fuels and energy. The commodity is likely to fluctuate within the resistance level of 89.954 and the support level of 86.794 ahead of some fundamental news in the Eurozone and the U.S. if weaker than expected data are released in the Eurozone, it might drag the commodity down to test the support level of 86.794. On the contrary, the commodity will continue its increasing trend to test the support level of 89.954 before the Fed Chairman Bernanke Speech on its monetary policy at 13:45 GMT, which will be the key risk event for the price of oil. Prudence is recommended on the commodity.
DAX: The DAX was trading at 6431.00 at the time of writing as euro zone debt crisis fears deepened, prompting investors to dumped riskier assets. The index is likely to fluctuate within the resistance level of 6500.10 and the support level of 6374.81 as investors are waiting for the manufacturing and service-sector activity data in the Eurozone as well as Germany and France own individual reports to better assess the direction of the DAX. Later in the day, the Fed Chairman Bernanke Speech on the monetary policy will come on the market and it might bring volatility on the market. Moreover, the troika of Greece’s international creditors -- the European Commission, the European Central Bank and the International Monetary Fund -- will arrive in Athens today amid doubts that the country will meet its bailout commitments. Germany’s Vice Chancellor, Philipp Roesler, said he’s “very skeptical” that the euro area’s leaders will rescue Greece. Investors should closely monitor all these developments to get indications movement of the market in general.