Perhaps the most notable economic reports this
week are the service sector data released in a number of major economies, while
attention will remain focused on the latest developments of the US-China trade
war.
In the midst of the current fears of global
economic slowdown, investors will focus on the services sector data, which is
the largest sector in many major economies, especially after the manufacturing
sector data showed a significant decline in the beginning of the third quarter.
Trade developments may shape dollar movements
The dollar's movement may be heavily affected
by any trade-related developments, especially after US President Donald Trump
threatened to impose more tariffs on the remaining Chinese goods imported by the
United States.
In terms of economic data, the PMI Composite of
manufacturing and services for July may show a slight improvement as it could
settle at 51.6 compared to the 51.5 reading in June.
The US Producer Price Index (PPI) may rise 0.2 percent
in July, while soar to 1.8 percent year-on-year from a previous of 1.7 percent.
Last but not least, it should be noted that any
comments from Fed members about the future interest rate could have a
significant impact on the movements of the dollar.
Euro to get clues from PMI data
The euro is likely to be affected by the
general trend in the financial markets due to the absence of important economic
data from the eurozone this week.
However, investors will concentrate on the euro
zone's final PMI manufacturing and service index, which could confirm an ease
in the growth pace in July to 51.5 from 52.2 in June.
It should also be noted that the minutes of the
ECB's monetary policy meeting will receive some attention, as it mainly gives
an in-depth look at the economic conditions that influenced the Governing Council
decision to hold interest rates at the last meeting.
Pound may receive a shock from UK GDP
The pound sterling remained a victim of the uncertainties
surrounding the Brexit, where it fell last week to the lowest level since
January 2017.
Following the decline in the manufacturing and
construction sectors, investors will focus this week on the services sector
index, which may fall to 49.9 in July from 50.2 in June.
Britain's gross domestic product (GDP) is
expected to fall by 0.1 percent in the second quarter after registering 0.5
percent growth in the first quarter.
The UK will also release other economic
indicators including industrial production, trade balance and the monthly GDP
for June.
Gold targets new record highs
Gold managed to gain ground last week, drawing
on concerns regarding the U.S.-China trade dispute and a Federal Reserve’s interest
rate cut.
This week, the yellow metal will largely depend
on the latest developments related to the trade war, as gold will attempt to
consolidate at $1,400 an ounce as support to continue its march towards
breaking new records.
Crude oil saw the biggest drop in years last
week after US President Donald Trump threatened of imposing more tariffs on all
Chinese imports.
US government data released last week showed that
the average oil refineries in the United States reached 17.2 million barrels
per day over the past four weeks, down 1.3 percent compared to the same period
last year.
Following an 8.5 million-barrel drop in U.S. crude inventories in the
week ended July 26, the EIA report due this week may signal a 6.2
million-barrel fall in crude stockpiles. Further drop in crude inventories
should give some support to oil prices.