A combination of economic data and central bank speeches will headline a relatively light event calendar on Monday.
Action begins at 06:00 GMT with a report on German producer inflation for the month of July. Germany’s producer price index (PPI) rose 0.3% in June, which translated into a year-over-year gain of 3%.
At 09:00 GMT, the European Commission’s statistical agency will report on construction output for the month of June. Construction spending is projected to grow 0.2% in June and 1.6% annually.
Shifting gears to North America, Bank of Canada (BOC) official Carolyn Wilkins will deliver a speech at 12:15 GMT. Later in the session, US Federal Open Market Committee (FOMC) member Raphael Bostic will deliver commentary. The FOMC voted to keep monetary policy unchanged earlier this month. The rationale for that decision will be provided on Tuesday with the release of the FOMC meeting minutes.
In addition to the economic calendar, traders are also keeping tabs on the latest developments in US-China trade negotiations. Last week, The Wall Street Journal reported that both sides were plotting a roadmap to resolve their trade dispute ahead of a multinational summit in November, where US President Donald Trump and Chinese counterpart Xi Jinping are expected to meet.
In currency news, the US dollar backtracked from yearly highs on Friday, though the fundamental picture continues to favor the greenback over the long haul. The US dollar index (DXY), which tracks the performance of the greenback against a basket of six currencies, was little changed at 96.11 on Monday.
EUR/USD
Europe’s common currency took advantage of a weaker dollar on Friday, as prices reached a high of 1.1451 US. At the time of writing, EUR/USD was valued at 1.1434. Economic data could be a boon to the euro in the coming days, although the underlying outlook continues to favor the dollar. That said, several economic reports later in the week could dictate the flow of the euro-dollar cross.
GBP/USD
Cable strung together a modest recovery last week; however, the outlook remains fully tilted to the downside. The GBP/USD exchange rate currently sits at 1.2743, where it was down 0.1% from the previous close. The pair faces immediate support at 1.2700, followed by 1.2665. On the flipside, resistance is likely found at 1.2760 followed by 1.2790.
USD/CAD
The USD/CAD exchange rate is back on the defensive after a double-top formation rejected the bulls’ attempt to take prices above 1.3200. At the time of writing, the North American cross is valued at 1.3065. The pair is testing the immediate support of 1.3067; a break below that level could expose 1.2970. On the opposite side of the ledger, the pair faces resistance at 1.3160, followed by 1.3292.
