![\"US](\"\/wp-content\/uploads\/2022\/08\/US-CPI-rates.jpg\")
<\/figure>\n\n\n\nGBP \u2013 GDP rates eyed<\/h3>\n\n\n\n
The pound is about to end the week slightly lower against the USD and JPY and notably lower against the EUR. BoE\u2019s interest rate decision may have weakened the pound. The aftershocks of BoE\u2019s interest rate decision yesterday, weighed on the sterling, closing the day in the reds, as the 50-basis points hike was largely anticipated and already widely priced in. On the other hand though, the bank struck a tone of uncertainty as it stated that the next rate hikes are to be data dependant and characteristically the bank stated that \u201cPolicy is not on a pre-set path\u201d. Moreover, the failure of BoE\u2019s members to deliver a unanimous vote came to a surprise at the time of the release, raising credibility concerns, alongside BoE\u2019s grim warning of a long recession ahead for Britain. The pessimistic outlook seemed to weigh on the pound and that\u2019s why we highlight the release of the UK GDP rates for June and Q2 on Friday. Should the GDP rates actually start to slow down or even drop into the negatives, that would practically reaffirm BoE\u2019s negative outlook for the UK economy and could weigh considerably on the pound. On the other hand, the bank\u2019s warning seems to also help the market anticipate and price in such negative data. Please note that on Friday besides the GDP rates for June and Q2, we also note the release of the Industrial output for June, the Manufacturing output for June and the trade balance for the same month.<\/p>\n\n\n\n JPY seems about to end the week at the same levels it begun against the USD, as well as against the GBP and EUR. Yet the description fails to describe the rollercoaster ride of the past few days for JPY traders. Overall, we continue to highlight how BoJ\u2019s dovish monetary policy continues to affect the JPY and is of key importance for its direction. We note that officials of the Ministry of Finance (MoF) in Japan seem to be foreshadowing that the bank may have to abandon its 0% cap on long-term interest rates. It\u2019s characteristic that Reuters reported that MoF official Saito stated, \u201cwe must bear in mind the BOJ’s current policy won’t last forever. Sometime in the future, it won’t buy as much bonds as it does now, and will no longer peg interest rates at a set level,”. Such a scenario could provide some support for JPY, yet seems to be still in the distant future for the time being. On a more fundamental level, we tend to note JPY\u2019s dual nature as a national currency and a safe haven. Should there be tensions in the international political scene, we may see JPY gaining as investors may navigate to its relative safety. As for financial releases we would like to note the release of Japan\u2019s Current Account balance for June as well as well as the Corporate Goods prices for July.<\/p>\n\n\n\n The common currency seemed to remain relatively stable against the USD and JPY yet gains slightly against the GBP. On a fundamental level the worries for Eurozone\u2019s economy due to the war in Ukraine and the tensions in its relationship with Russia are still intense. The possible insufficiency of natural gas supplies from Russia still looms over Europe like a spectre. On the monetary front, ECB\u2019s pivot in its latest meeting towards tightening its monetary policy is still present and the pressure seems to be rising to deliver another 50 basis points rate hike in the September meeting. The issue of fragmentation of borrowing costs for member states of the Eurozone is still an issue especially for countries like Italy, yet as Bloomberg reports, the bank seems to have deployed billions of Euros in bond purchases to shield Italy, displaying its determination not to allow the spread of borrowing costs between member states to widen out of control. The flexible reinvestment of the Pandemic Emergency Purchases Program (PEPP) seems to be the first line of defence for the bank currently and not the Transmission Protection Instrument (TPI) which tends to imply that the bank\u2019s policy also carries a substantial degree of depth with it. As for financial releases we would like to note that the contraction of economic activity across sectors and member states, as signalled by the preliminary Composite PMI figure of the Eurozone for July, was reaffirmed which was a negative on a macroeconomic level. Yet Germany\u2019s trade surplus surprisingly widened creating some hopes, as the economic powerhouse of the area regained its ability to export products. The coming week is about to be a rather slow week regarding financial releases, yet we would still like to note the release of Eurozone\u2019s forward looking Sentix index for August on Monday, the final HICP rates of July for Germany and France on Wednesday and Friday respectively, while on Friday we also get Eurozone\u2019s industrial output growth rate for June.<\/p>\n\n\n\n AUD seems about to end the week near the same levels the week begun on Monday against the USD, despite some increased volatility being present. Especially RBA\u2019s interest rate decision on Tuesday tended to weaken the Aussie. It should be noted that the Aussie tended to weaken against the USD despite RBA delivering a double rate hike, as was widely expected. In Governor Lowe\u2019s accompanying statement, it was reaffirmed that \u201cThe Board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path. The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market\u201d. The fact that the bank stated that there is a degree of uncertainty in its future rate hikes, given that it is not \u201cset on a pre-set path\u201d allowed for the Aussie to drop and could weigh as the bank relented a part of its decisiveness. In the coming week, given the low number of high impact financial releases from Australia, we expect fundamentals and market sentiment to be the primary factors behind the Aussie\u2019s direction. Should the market sentiment be positive and more risk oriented, we may see AUD getting some support as a commodity currency. On the other hand should the tensions in the US-Sino relationships escalate further, we may see the Aussie weakening, given the close ties of the Australian and the Chinese economies as well as the wide amount of raw materials exported from the land of the down under to the Red Dragon. Hence we highlight the release of China\u2019s trade data for July on Sunday, especially the import growth rate. We would also like to note the release of China\u2019s inflation metrics for July on Wednesday while from Australia we note the release of the consumer sentiment for August and business confidence and business conditions for July, all coming out on Tuesday.<\/p>\n\n\n\n The CAD remained rather steady against the USD in the past few days, maybe with some slight losses and the drop of WTI prices may have adversely affected the Loonie. It should be noted that the positive correlation between oil prices and the CAD was on display once again maybe though not to the extent we expected. Oil prices slid lower in the past few days, despite OPEC announcing meagre increases in production levels for the commodity, which underscored the limitations in the capacity of major oil producing countries. On the other hand, we must note that US oil reserves tended to balloon further as both the API and EIA weekly oil inventories figures showed. The issue seems to be intensifying as problems are reported in shipping the commodity out of the US and we may see oil reserves in the US rising further in the coming days, especially for Cushing. Should that be the case we may see oil prices slipping further which may intensify the bearish tendencies for the CAD. On the monetary front we expect BoC\u2019s monetary policy tightening intentionsto be maintained and thus, could provide some support for the Loonie. On a more fundamental level we expect, given also the lack of high impact financial releases, the market sentiment to be the main driver for the CAD. Should the market sentiment be more risk on and positive, we may see the commodity currency getting some support and vice versa. Also please note that Canada\u2019s employment data for July are still to be released later today and could alter the CAD\u2019s direction before the week ends.<\/p>\n\n\n\n As a closing comment we expect the greenback to maintain its initiative over other currencies in the FX market given the number of high impact financial releases stemming from the US, with the highlight being the CPI rates for July on Wednesday. On the other hand, other currencies could also come under the spotlight once again in certain moments during the week. Overall, we would like to note that we are entering the holiday period hence we may see lower volatility being present for the markets, while in regards to US stockmarkets, we expect the earnings season to continue to keep traders busy, yet the number of high profile companies releasing earnings reports seems to be narrowing, which could reduce the interest of traders especially in the periphery rather than the core of the markets. Last but not least we must note that gold\u2019s price was on the rise, for a third consecutive week, as the precious metal capitalised from the, up until now, relative inactivity of the greenback. 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 Disclaimer: As the US employment report for July and Canada\u2019s employment data are still to be released, we take a look<\/p>","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-35753","post","type-post","status-publish","format-standard","hentry","category-uncategorized","blog-category-financial-news","entry"],"acf":[],"yoast_head":"\n![\"UK](\"\/wp-content\/uploads\/2022\/08\/UK-GDP-ratesx.jpg\")
<\/figure>\n\n\n\nJPY \u2013 Roller coaster movement for JPY<\/h3>\n\n\n\n
![\"Japan](\"\/wp-content\/uploads\/2022\/08\/Japan-Current-account-balance.jpg\")
<\/figure>\n\n\n\nEUR \u2013 Steady she goes<\/h3>\n\n\n\n
![\"Eurozone](\"\/wp-content\/uploads\/2022\/08\/Eurozone-Sentix-Index.jpg\")
<\/figure>\n\n\n\nAUD \u2013 China\u2019s trade data and optimism to move AUD<\/h3>\n\n\n\n
![\"China](\"\/wp-content\/uploads\/2022\/08\/China-trade-Data.jpg\")
<\/figure>\n\n\n\nCAD- Oil prices to be watched out for<\/h3>\n\n\n\n
![\"Oil](\"\/wp-content\/uploads\/2022\/08\/Canada-oil-rigs.jpg\")
<\/figure>\n\n\n\nGeneral Comment<\/h3>\n\n\n\n
This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.<\/p>","protected":false},"excerpt":{"rendered":"