The markets were seen trading mixed on Tuesday as equities paused in their rally and gold managed to post some modest gains on the day. With the producer prices index coming out lower than expected, focus turns to today’s inflation report. The consumer price report could be a potential market mover as it could cement expectations on monetary policy. The Fed is due to meet next week and could signal dovish forward guidance.
Euro Unmoved by Sentix Investor Report
The common currency brushed aside weakness in the latest Sentix investor report as the currency remained bullish. The monthly report saw the index falling to -3.3, missing estimates of 2.3. Previously, the index registered a reading of 5.3. Later today, the ECB President Mario Draghi is slated to speak at a scheduled event.
EURUSD Aiming to Test Last Friday’s Highs
The currency pair has been retracing the modest losses from earlier this week. Price action is seen aiming for Friday’s highs near the 1.1338 level. A close above this high could potentially confirm further upside in price. The next main price level of interest in the currency pair is 1.1400.
UK Unemployment Rate Holds Steady
The monthly unemployment report from the UK showed that the rate held steady at 3.8%. Wage growth was also positive, rising 3.1% or about 3.4% without adjusting for inflation on a year over year basis. Economists forecast that wage growth would slow. Revision to previous data saw the wage growth being revised from 3.1% to 3.3%. The sterling managed to post some modest gains on the back of the unemployment report.
GBPUSD Attempts to Breakout From its Range
The currency pair attempted to push to the upside as price managed to recover within the range. GBPUSD is seen once again trading at the top end of the range at 1.2716. As long as price holds this level, we could expect to see further gains in store. The next upside target is seen at 1.2895 where resistance is most likely to form.
Gold Recovers Following Monday’s Slump
Gold prices were seen recovering early this morning. Price posted a strong reversal in an attempt to reverse the declines from Monday this week. The rebound in gold prices come as equity markets paused their recovery rally. Producer prices index report was subdued, adding to the speculation of a potential rate cut from the Fed this year.
Can XAUUSD Maintain the Gains?
The rebound in gold prices coincides with a brief test of the support area at 1322–1313 level. A bullish close is required on the day in order to confirm the upside. Gold prices will likely aim for Monday’s gap at 1340.44 initially. A close above this level will potentially signal further gains in the near term.