US economy continues the second quarter with weak data

Mario Draghi’s speech last Thursday wasn’t a surprise giving the reminder message of QE, which in the ECB perspective, has the desirable effect in terms of calming the yields assault in public debt markets. The European Central Bank’s chief also ensures traders that the program will continue until inflation reaches a healthy area.

EURUSD is still close to the 1.1500 resistance level as the American dollar remains weak. The Empire State Manufacturing Index decreased to 3.1 points, the Capacity Utilization Rate was published below expectations to 78.2%, the Industrial Production was reported below estimates to -0.3%, the preliminary University of Michigan Consumer Sentiment decreased to 88.6 points and TIC Long-Term Purchases fell to 17.6 billion. All of the data aligns with the postponement of the increase in the interest rate.

On the other hand, the European currency may be subject to higher volatility as Greece is announcing changes in its approach. First of all, Alexander Tsipras took the helm negotiations while declaring that his government would not back down from its red lines in negotiations with its foreign lenders. Secondly, he highlighted the need of having a deal reached soon in the following months as Greece was close to a default last week.

Core Machinery Orders in Japan rose about 2.9%, rising hopes for a smooth recovery, but the Revised Industrial Production fell even deeper below expectations to -0.8%, while the Tertiary Industry Activity also devolved below expectations to -1.0%. The preliminary GDP is expected to be published on Wednesday in line with the last publication to 0.4%. This report represents a chance for the Japanese economy to demonstrate it can sustain two straight quarters of moderate growth. China’s new home prices also fell for the eighth consecutive month in April from a year earlier, fact that is adding to pressure on the Asian area.

Both AUDUSD and NZDUSD are weak in front of the dollar, resuming their descending trends. The local support area for the AUD is located at 0.7990, while for NZD the 0.7340 zone remains active. Before going lower, the currency pairs may generate corrections.

The price of gold is currently stabilising in the 1221 – 1227 area since it has gained solid ground in the recent period. The perspective on a longer term shows us that the price was following a lateral movement. The quotation is now situated on the upper side, so a breakdown of 1210 may encourage a significant decline in the price. Otherwise, the price progression above 1227 dollars could lead to the continuation of the increasing trend.