MARKETS TO REMAIN ON EDGE AFTER VOLATILE WEEK
Global equity markets are coming off a rough week, as political tensions in Washington triggered a fresh bout of risk aversion. Declining risk appetite drove investors into the safety of precious metals, with gold prices briefly climbing above $1,300.00 a troy ounce. A dearth of economic data on Monday will keep investors focused on politics ahead of a highly active week in the market.
In terms of data releases, the UK Office for National Statistics will report on UK public sector net borrowing at 08:30 GMT. The monthly indicator tracks the amount of new debt held by the various levels of the British government.
Later in the day, the Deutsche Bundesbank will release the Buba monthly report, which provides a detailed account of the domestic economy.
In the North American session, the Federal Reserve Bank of Chicago will release the National Activity Index at 12:30 GMT. The monthly report gauges overall economic activity in the US economy.
North of the border, Statistics Canada will report on wholesale sales for the month of June.
In currencies, the US dollar was little changed against a basket of world peers on Monday. The dollar index (DXY) spiked to more than three-week highs last Tuesday before losing momentum in the latter half of the week. The greenback could face heavy price action later in the week as markets await the annual Jackson Hole Symposium, which is organized by the Federal Reserve Bank of Kansas City.
The EUR/USD is consolidating in the mid-1.17 range. Prices recovered on Friday after losing ground during the previous session. The pair will take cues from political developments in Washington over the coming days. The EUR/USD immediate support is located at 1.1712, although analysts warn that this is a weak line. A breach of this level would expose 1.1616 as the next target. On the opposite side of the spectrum, immediate resistance is located at 1.1876.
The British pound succumbed to bearish pressure last week, with the cable falling further below yearly highs. The GBP/USD exchange rate consolidated near five-week lows after prices failed to hold $1.2900. Cable was last seen trading at 1.2877, where it was little changed compared with the previous close. The 1.2840 area is a vital short-term support. A break below that level could expose cable to heavier losses. Bullish traders should look for a move north of 1.2900 to confirm the positive signal.
Gold prices swung higher last week, overtaking the critical $1,300.00 level. The rally was short-lived, with prices falling back down toward $1,290.00. Traders looking to enter gold should monitor the stock market for risk sentiment. Volatility in equities will likely push investors into the safety of precious metals.