![\"US](\"\/wp-content\/uploads\/2022\/08\/US-retail-sales.png\")
<\/figure>\n\n\n\nGBP \u2013 CPI rates and employment data to move the pound<\/h3>\n\n\n\n
The pound is about to end the week stronger against the USD, yet not the EUR and JPY, implying that the rise of cable was more related to the weakness of the greenback rather than the strengthening of the sterling. On a fundamental level the race for the leadership of the Tories and the seat of the UK Prime Minister is on and headlines are appearing for Rishi Sunak and Liz Truss, with many political promises possibly affecting fiscal policy in the future, but for the time being seemed to have little if any effect on the market. Among promises for tax cuts from Truss and subsidies for energy from Sunak, Truss\u2019s idea for BoE seems to be heavily debated. From weakening regulator\u2019s powers to altering the bank\u2019s mandate, all could be spelling bad news for the pound. It\u2019s no surprise that BoE Governor Bailey defended the importance if the independence if the central bank and the powers of the regulatory arm of the bank. On the other hand BoE\u2019s Governor also warned that interest rate hikes are to continue despite an extended recession in the UK economy, in order to prevent inflationary pressures becoming embedded in the UK economy. Also BoE\u2019s chief economist Huw Pill stated that Britain will only feel the full impact of higher interest rates in late 2023 and that it is unlikely to be any return of quantitative easing for at least a few years, according to Reuters. The statement more or less reaffirmed the bank\u2019s intentions to continue on its rate hiking path to curb inflationary pressures, while at the same time contradicts the idea that the bank will ease its monetary policy next year in order to fight a recession in the UK economy. As for financial releases we note the decline of the GDP rates for Q2 and June in negative territory, yet there was little reaction on the sterling. In the coming week though, we also get a number of financial releases that could interest pound traders. We make a start on Tuesday with the release of the UK employment data, while on Wednesday we highlight the release of UK\u2019s CPI and PPI rates for July. Finally on Friday we get the retail sales growth rate for July.<\/p>\n\n\n\n JPY is about to end the week stronger against the USD, but also GBP and EUR in \u03b1 wider sign of strenghtening for the JPY. On a fundamental level we have to highlight the dual nature of JPY as a safe haven and a national currency. Hence any frictions in the interantional scene could create inflows for the Japanese currency. On a political level, the reshuffling of the Japanese Cabinet by Prime Minister Kishida cannot pass unnoticed. Public anger is being reported against the government of ties with the Unification Church, which has been characterised as a cult by critics. It should be noted that approval ratings of the Japanese Prime Minister Kishida are currently at very low levels over the issue. It\u2019s no surprise that PM Kishida stated that the Church had no sway over the government\u2019s policies and reshuffled the cabinet in an effort to ease any public reactions. It should be noted that according to Reuters the assasination of former Prime Minister Abe was linked to the issue. Overall though the direction of the Government\u2019s policies seems to remain unchanged given that Finance minister Suzuki, remains in his post. The issue seems to be harmless yet for Japanese politics is serious and given that the stakes are high, it should be kept under watch, at least initially on a fundamental level. On a monetary level we expect the ultra loose monetary policy stance of BoJ to remain unchanged. Overall the policy stance is expected to remain the same until Governor Kuroda\u2019s retirement next year, but even then, local media report that PM Kishida seems to be leaning towards the idea of the next BoJ Governor also being a dove. JPY traders though are to have a busy schedule ahead for the coming week. We make a start on Monday with the preliminary GDP rates for Q2 and should the rates remain in the negatives, that could imply that the Japanese economy has entered a technical recession. On Wednesday, we would also like to note the release of Japan\u2019s machinery orders for June as well as the trade data for July. Finally on Friday we highlight the release of Japan\u2019s CPI rates for July and a possible acceleration could provide some support for the JPY as it could increase the pressure on BoJ to tweak it\u2019s dovish policy.<\/p>\n\n\n\n The common currency is about to end the week higher against the USD as well as against the pound but not JPY. There are scorching high temperatures in Europe and energy consumption seems to be running high as well. It\u2019s characteristic that France and the UK have issued extreme hot weather alerts. It\u2019s also characteristic that the Rhine River is reported to have low levels of water, actually so low, that some parts are about to, or have been closed for transportation. The river is considered a vital shipping route for Germany\u2019s manufacturing sector and a possible halt of transport through the watery corridor could slow down the German economy, which is considered the economic powerhouse of the area. At the same time, energy consumption seems to be on the rise as the need to cool homes and offices grows. It\u2019s reported that power prices in France and Germany have reached record levels as demand for natural gas got a boost. The situation seems to be dire and the stage seems to be set for an even more difficult winter ahead, given the dwindling natural gas inventories of the area. The possibility of energy rationing is being actively considered by European states and it\u2019s characteristic of the situation. Yet environmental issues seem to have more diverse implications for the continent. Energy stations may have to work at low levels in order to prevent them from overheating, while the risk of fires in forests is rising substantially. On a monetary level, we expect the ECB to maintain its stance regarding its policies, especially in order to avoid fragmentation of the debt costs of member states. We also note that the slowdown of the US CPI rates for July in the US may have an effect also on the balance of power within the ECB, as supporters of faster rate hikes may argue that the Fed, given its wider rate hikes, is more effective in curbing inflationary pressures than the ECB. On the other hand, one could argue that each economy has its own characteristics and the Fed\u2019s policies are not to be simply blindly followed. As for financial releases in the coming week, we have a rather light calendar for EUR traders, yet we would still like to note the release of Germany\u2019s ZEW indicators for August on Tuesday and on Wednesday Eurozone\u2019s second estimate of the GDP rate for Q2. Finally on Thursday we get Eurozone\u2019s final HICP rate for July<\/p>\n\n\n\n AUD is about to end maybe one of the best weeks it had since February, against the USD. On a fundamental level , we note that the improved market sentiment seems to be providing support for the commodity currency, which is considered a riskier asset. On the other hand though, the escalation of the tensions in the US-Sino relationships are still an issue for the Aussie. We maintain our fundamental worries for the possibility of China proceeding with military action on the island of Taiwan. It\u2019s characteristic that Taiwan\u2019s foreign minister Wu warned earlier today in a press conference that \u201cChina has used the drills … to prepare for the invasion of Taiwan\u201d according to Reuters and urged \u201cinternational support to safeguard peace and stability across the Taiwan Strait\u201d. It should be noted that the Taiwan straits are of the busiest shipping routes worldwide and tensions could halt trading activities. We highlight the possible adverse risks for the Chinese economy of the matter, but also the closely linked Australian economy, as well as the outlook for global economy as a whole, given its severity. On the monetary level we note the release of RBA\u2019s latest meeting minutes on Tuesday, which could provide a deeper insight for the bank\u2019s intentions. It should be noted that a degree of uncertainty was inserted in the latest decision, which tended to weaken the Aussie. As for financial releases we note from Australia the release of July\u2019s employment data. Should the rates and figures show that the Australian employment market seems to remain tight we may see the Aussie getting some support as it would encourage RBA to proceed with more and faster rate hikes. From China, we note on Mondays\u2019 Asian session the release of July\u2019s industrial output and retail sales. Should the growth rate be on the rise that could provide some support for the Aussie as it would imply a faster expansion of economic activity in the Chinese industrial sector and a rather robust internal market demand, which in turn could imply more exports of Australian raw materials to China.<\/p>\n\n\n\n The Loonie is about to end the week stronger against the greenback recovering all the losses of the week before and then some. On a fundamental level, we note the influence that oil prices may have on the commodity currency\u2019s price action. It should be noted that WTI prices seem to be on the rise for the past few days which may have contributed to the strengthening of the CAD as well. Overall oil\u2019s price seems to have conflicting fundamentals as on the one hand, oil inventories in the US are on the rise yet, also a high demand for gasoline is being reported. On the monetary front we tend to maintain the expectation for BoC to remain tilted to the hawkish side, given the high inflationary pressures in the Canadian economy. Please note though that Canada\u2019s inverted yield curve rings the bells of alarm, that the bank may be proceeding too fast with rate hikes and risks throwing the Canadian economy into a recession. For the time being it seems that the market\u2019s expectationsfor the Bank to proceed with a 75 basis points rate hike are cooling down, yet that also depends on developments on the inflationary front. Hence in the coming week we highlight the release of Canada\u2019s CPI rates for July. Please note that the headline rate accelerated further in June, reaching a 39 year high at 8.1% yoy, adding more pressure on BoC to hike rates at a fast pace. Should the rates slowdown though, implying that inflationary pressures have peaked and are correcting lower, we may see the CAD losing some ground as that would allow BoC to ease its hiking approach somewhat. On the other hand, should the rates accelerate further, we may see the pressure on BoC intensifying. Last but not least, we would also like to note the release of Canada\u2019s retail sales for June on Friday.<\/p>\n\n\n\n As a closing comment we expect the greenback to relent some of its advantage over other currencies in the determination of the FX market\u2019s direction, given that the number of high impact financial releases stemming from the US is lessening, yet still the release of the Fed\u2019s meeting minutes could generate some substantial interest among traders. On the other hand, other currencies could also come under the spotlight once again in certain moments during the week. At this point we would like to highlight the release of the interest rate decisions from the central banks of New Zealand, Turkey and Norway which could stir the waters of their respective currencies. Once again we note that we are entering the holiday period and we may see thin trading conditions being reflected at some points in the markets. As for US stockmarkets, given that the earnings season is slowly coming to an end, as most high profile companies have released their earningsreports, we expect traders\u2019 interest to return to normal levels. Last but not least, we must note that gold\u2019s price was on the rise, for a fourth consecutive week, as the precious metal benefited from the weakening of the greenback. Yet we expected actually gold\u2019s reaction to be wider so, despite the directional part being as expected the quantitative part of gold\u2019s ascent tended to disappoint us. We expect the negative correlation with the USD to be maintained in the coming week and could define gold\u2019s direction.<\/p>\n\n\n\n![\"UK](\"\/wp-content\/uploads\/2022\/08\/UK-CPI-rates.png\")
<\/figure>\n\n\n\nJPY \u2013 GDP rates and other financial data eyed<\/h3>\n\n\n\n
![\"Japan](\"\/wp-content\/uploads\/2022\/08\/Japan-Inflation-metrics.png\")
<\/figure>\n\n\n\nEUR \u2013 Scorching temperatures<\/h3>\n\n\n\n
![\"Germany](\"\/wp-content\/uploads\/2022\/08\/Germany-ZEW-indicators.png\")
<\/figure>\n\n\n\nAUD \u2013 Employment and Chinese data in focus<\/h3>\n\n\n\n
![\"Australia](\"\/wp-content\/uploads\/2022\/08\/Australia-Employment-data.png\")
<\/figure>\n\n\n\nCAD- CPI rates in the epicenter<\/h3>\n\n\n\n
![\"Canada](\"\/wp-content\/uploads\/2022\/08\/Canadas-CPI.png\")
<\/figure>\n\n\n\nGeneral Comment<\/h3>\n\n\n\n