FXStreet (Bali) - Sean Callow, FX Strategist at Westpac, reviews the day ahead, noting that today's China HSBC manufacturing PMI is expected to show a slight improvement following last month's upbeat reading.

Key Quotes

The ‘flash’ July reading on China’s manufacturing PMI from HSBC/Markit is due at 11:45am Syd/9:45am local, with expectations for further improvement but only mild: 51.0 versus 50.7 in June. This would be a high since March 2013. This seems reasonable to us, with the orders/inventories ratio in June pointing to further headline improvement. AUD and Asian currencies should react to any surprise of more than 0.1ppt.

We will also see ‘flash ’July readings on Markit PMIs in Europe, where little change is expected in the Eurozone manufacturing PMI (51.8) or the services PMI (52.7). The German and French reports released before the EZ reading sometimes impact EUR. UK retail sales is a frequent source of volatility for sterling. Today we see the June report, expected to rise slightly (median 0.1% m/m, Westpac 0.2%) after the -0.5% slide in May which was mostly attributed to the unusually late Easter (high base in April).

In the US it’s weekly jobless claims, the little-watched Markit PMI and Jun new home sales. These are expected to pull back sharply from the 18.6% surge in May; anything around -5% to -8% should be taken calmly by markets given the volatility in the series.