Market Brief 31 July: Pending Home Sales from the U.S. to move the markets


Good morning Traders!

Today, we have three major events on the calendar that are likely to bring in fresh volatility in the markets. All three are high-impact news, so we’ll be on the lookout for opportunities across markets.

China

CNY and AUD 02:00 a.m. GMT + 1, Manufacturing PMI (Jul) – market analysts are forecasting a small decrease in Chinese manufacturing performance at 51.6 for the month of July compared to 51.7 for the previous period. The reason why we’re looking at China is the significant contribution it has to the world. China is the second largest economy with $ 11 trillion GDP which represents 14.8% of global economy. The leader is the United States at $ 18 trillion GDP, representing almost a quarter of the world economy (24.3%).

The performance of China has a direct impact on the demand of the Australian dollar. The reason behind it – Australia is largely a commodity based economy including mining, farming, agriculture, and gold. The demand for natural resources comes predominantly from China, India and Japan. So, increased levels in manufacturing in China would mean that the economy will have increased demand for commodities in order to keep up with its production levels. If the actual manufacturing PMI in China is higher than expectations, this should be read as a strengthening sign for the Australian currency. The converse would also be true- if the performance is strikingly lower from expectations, this could weaken the Aussie.

European Union

EUR 10:00 a.m. GMT +1, CPI (YoY) (Jul) P – the index measures inflation from consumer point of view. Analysts forecast inflation to remain the same at 1.3%. If the result comes out higher than expected, this should be taken as a positive sign for the euro. In case, inflation has dropped, this should be read as a negative sign for the common Euro Zone currency.

United States

USD 15:00 p.m. GMT +1, Pending Home Sales (MoM), (Jun) – Projected numbers for the highly expected event point to an increase at 1.0% compared to – 0.8% for the previous period. If the report comes out with higher than expected results, this should boost the value of the U.S. dollar. Conversely, if the result is a lot lower than projections, this should devalue the currency.

 

Wishing you successful trading!

 

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