GLOBAL MARKETS FOCUS ON ECONOMIC DATA, FED
Tuesday sees an active release schedule on the economic calendar, with reports coming from both sides of the Atlantic. Monetary policy will also be top of mind for investors as the Federal Reserve begins its two-day policy meeting in Washington.
The first item on the economic calendar is the Eurozone current account balance, which is scheduled for release at 08:00 GMT. In seasonally adjusted terms, the account surplus is forecast to widen to €22.3 billion in July from €21.2 billion the previous month.
One hour later, the European Centre for Economic and Social Research (ZEW) will release a pair of closely-watched sentiment indicators. Germany’s economic sentiment index is believed to have risen this month, according to a median estimate of economists. The current situation index is also forecast to rise slightly.
ZEW will also release a euro-wide sentiment index at 09:00 GMT. The indicator is expected to show a sizable increase in economic optimism for the 19-member Eurozone.
Earlier in the day, the Reserve Bank of Australia (RBA) released the minutes of its most recent policy meeting, where it voted to leave interest rates unchanged. The Australian dollar was little changed after the transcript was released.
In North America, the US Commerce Department will release its latest report on housing starts and building permits. Starts are forecast to rise 1.7% in August, while permits are expected to edge down 0.8%.
The Federal Open Market Committee (FOMC) will begin its two-day policy meeting on Tuesday, with an official interest rate statement scheduled for the following afternoon. The Fed is not expected to raise rates on Wednesday, but could outline its plan to begin unwinding its $4.5 trillion balance sheet.
The Australian dollar traded within a narrow range on Tuesday, as investors parsed through the RBA meeting minutes. Unable to reclaim the 0.8000 level, the AUD/USD is facing renewed bearish pressure. Prices closed below the 20-day simple moving average of 0.7971, setting the stage for a possible decline back toward the 50-day SMA near 0.7920.
The euro edged higher in Asian trading on Tuesday, as the dollar eroded some of its recent gains. The AUD/USD climbed 0.2% to 1.1970. The pair faces an immediate test at 1.1975, with a clean break supporting a bigger rally back toward the all-important 1.2000 level. Above this region, the next resistance is seen at 1.2030.
Gold prices declined sharply at the start of the week, as risk sentiment returned to the financial markets in a big way. Bullion settled near three-week lows on the Comex division of the New York Mercantile Exchange. Prices remain supported near the psychological $1,300.00 level. The spot contract was virtually unchanged during the Asian session at $1,308.00 a troy ounce.