Dollar trades broadly lower today and markets' focuses turn back to economic data. Eurozone PMIs will be closely watched in European session. EUR/USD dipped to we low as 1.1118 earlier this week but is holding above 1.1109 near term support. While some point to topping in EUR/USD after failing 1.1298 key resistance. There is no confirmation of rejection and trend reversal yet. Thus, the pair is staying bullish and upside surprises in today's Eurozone data will put focus back to 1.1298. Canadian CPI will be another key focus. USD/CAD dropped sharply overnight as the Canadian dollar was boosted by strong retail sales. It's likely that near term consolidation from 1.3164 has already completed at 1.3346. And strong consumer inflation data should give the fuel for USD/CAD to power through 1.3164 support. Also, from US, PMIs and new home sales will be featured.
In Japan, PMI manufacturing dropped to 52.0 in June, down from 53.1 and missed expectation of 53.4. Looking at some details, new orders dropped to 51.3, down from 53.4, and hit the lowest level since November. New export orders also dropped to 52.5, down from 53.0. Markit noted that "slower growth was signaled in June, with both orders and output rising at the weakest rates since late last year amid reports of a slight softening in market conditions." Nonetheless, "demand is holding up well, and the sector continues to operate within a solid growth range."
Much volatility is seen in Chinese equities market this week. The CSI 300 index hit 18 month high earlier this week on news of MSCI's decision to include 222 A-share large cap stocks into its global benchmark equity index. It's seen by economists as a pivotal moment and the decision is said to have broad support from institutional investors. However, Chinese equities were then shot down by news that the China Banking Regulatory Commission asked some banks to provide information on overseas loans made to some major Chinese conglomerates. The news is seen by some as a deeper worry on overseas acquisition and a prelude to tightening overseas loan issuance.
Outgoing BoE MPC member Kristin Forbes warned again that "lift-off of UK interest rates should not be delayed any longer." And she repeated the argument that "Sterling's depreciation has fundamentally shifted underlying inflation dynamics in a way that makes it more pressing to begin this voyage soon." Also, "the UK economy appears to be solid enough on key economic criteria, and even 'overstimulated' by others, such that a moderate reduction in the substantial amount of monetary stimulus ... makes