Expect some considerable volatility in the value of the US dollar versus its major counterparts on Monday as a host of key fundamental releases scheduled a couple of hours after the US session open. The releases related to construction and manufacturing as such, could be leading indicators as to the state of the US economy over the next few months, and in turn, likelihood of a 2015 interest rate hike. Equivalent releases out of the Eurozone could temper any volatility to keep an eye on the directional bias to form an outlook is the day matures.
Just as with the US, UK set release some key manufacturing data on Monday. UK markets struggled on Friday, and as such, the sterling fell against the majority of its major counterparts heading into the weekend. Whether this is to be the case again on Monday will largely be dictated by the outcome of the upcoming manufacturing PMI release. Consensus forecasts the release at 57.0, which indicates expansion, will look for anything below this to put pressure on the major sterling crosses such as the cable (GBPUSD).
The Australian dollar was relatively flat against the US dollar by the time the markets closed on Friday, but a string of key releases over the weekend will likely ensure some movement in the pair on Monday and as we head into the middle of the week. Both building approvals and business inventory’s missed expectations on Sunday, which could put pressure on the value of the Australian dollar during Monday’s session. In addition, as the US markets close on Monday evening and the Asian session starts, the Australian current account and retail sales figures are set for release. With this Australian government focused on rebalancing the economy to mitigate the effects of the mining downturn, traders will be looking to the retail sales data as an indication of the efficacy of this rebalancing.
Global markets have opened strong on Monday having been relatively subdued on Friday. European markets across the board, with the DAX and the FTSE 100 both trading around 0.3% higher than the session open as we head into the European lunchtime session. In addition, US futures are pre-trade, and if data out of the US comes out better than expected or on target, look for further strength as the day matures.
Crude oil is up pre-market in the US, as traders buy futures contracts in anticipation of the upcoming manufacturing releases. The price of crude oil is strongly tied to the level of manufacturing activity in the US, and globally, so look for a better than expected release to support crude oil around its current level at 103.09, and fuel further gains as Monday matures and heading into the middle of the week.
Having dipped on both Thursday and Friday last week, gold is relatively flat heading into the European lunchtime session. Don’t expect this to continue however, and look to the upcoming manufacturing releases to offer an intraday bias. If the releases come out better than expected, look for the risk on sentiment that dominated trading last week to retain its strength, and in turn, put pressure on the price of gold. Conversely, disappointing releases could shift sentiment to a more risk off attitude, and cause a temporary rally in the gold market.
Only one release is scheduled from New Zealand on Monday, but that does not mean that the value of the New Zealand dollar will likely remain flat against its major counterparts. China is set to release its non-manufacturing PMI figure and the HSBC manufacturing PMI figure later on this evening, and both releases have potential to inject some volatility in the value of the New Zealand dollar. The New Zealand economy is very closely linked to that of China, so look for a miss in both releases to offer or a bearish bias in the NZDUSD late on this evening and heading into the Tuesday morning session.