Traders focus on announcements this Thursday

Investors are exercising caution ahead of Thursday, when we expect both China flash PMI and FOMC minutes.

HSBC and Market Economics are due to release a preliminary reading of China’s manufacturing PMI numbers for August on Thursday, 22 August. The Bloomberg survey expects a contraction of 48.2.

The official manufacturing numbers showed stability in the manufacturing and non-manufacturing PMI in July. Investors will look to the HSBC flash number for any sign of recovery since the government implemented stimulus plans for SMEs.

We expect consolidation in gold after a run up of 12.5% since 28 June. There are two possible scenarios with resistance at $1375. There could be consolidation to $1315, or bullish sentiment acting as a catalyst, pushing gold past the resistance of $1375 and towards the next resistance level of $1421.

Confidence in the UK economic growth recovery is gaining momentum after services, manufacturing and construction indices rose. Gilts fell for a fourth consecutive week, with investors expecting the Bank of England to raise rates. We hold a bullish view on the GBP/USD. It has broken out of a bearish wedge with further upward momentum expected.

We see resistance for the USD/JPY at 97.70, which has been unable to break out of the 98-99 levels.

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