Fundamental Comment

Economic Week: ECB Monetary Policy Meeting, US Data

ECB Monetary Policy Meeting, US Data in focus

Global market watchers will be following a number of important events and economic data this week as the European Central Bank will set interest rates, while high-relevance economic data will be released from the United States.

Euro traders to focus on ECB meeting

The euro will be affected by the comments of the European Central Bank, where monetary policy makers will meet this week to set interest rates.

The central bank is expected to keep interest rates, but the ECB may announce new stimulus plans to support economic growth and inflation in the euro zone.

Financial markets will wait for the latest economic developments in the Eurozone, amidst the global economic slowdown and trade war, as well as the uncertainties regarding Britain's exit from the EU.

On the economic data front, investors will focus on the eurozone manufacturing and services Purchasing Managers’ Index (PMI), which may show a slight drop in growth in July to 51.9 from 52.2 in June.

US dollar will receive signals from data

The US dollar will remain under scrutiny as investors will follow the latest economic data from the US as they may significantly determine the course of monetary policy of the Federal Reserve.

One of the most important reports this week is the preliminary GDP reading for the second quarter, which may show a decline in growth to 1.9% year-on-year, compared to the first quarter's 3.1% growth.

Another very important report is the durable goods orders, which may signal a 0.5% rise in June after falling by 1.3% in May.

Also, the initial Manufacturing and Service PMI for July may receive some attention, as the report will reflect the state of economic activity at the beginning of the third quarter.

Last but not least, US officials may travel to Beijing this week for personal negotiations with their Chinese counterparts.

Pound to follow general market trend

As usual, the attempts by the British pound to rebound from a two-year low against the dollar last week failed, as the negative impact of the Brexit continued alongside the ongoing political conflict.

The British Pound's movements this week may depend on the latest developments in the Brexit, as there is no economic data of great importance from Britain. Therefore, the pound is likely to move according to the general trend in the markets and the latest political developments in Britain.

Commodities look for exiting volatility

Last week, gold traded above $1400 an ounce as the prices benefited from trade tensions between the United States and China and expectations of a Fed rate cut by the end of July.

It is reasonable to claim that gold prices this week will depend on US data and recent developments in US-China trade talks.

Regarding oil prices, there has been some decline in the past week, despite data from the US government showing a larger-than-expected drop in crude stocks last week, since investors instead focused on large building of refined product stocks.

Oil price movements will depend on optimism or pessimism in the markets in the event of any developments in the US-China trade negotiations, as well as the US government's weekly report tracking the change in of US crude stockpiles.

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