United States of America

USD is strengthening against EUR and GBP but is ambiguous against JPY.

Investors are gearing up for the key event of the week, the US Fed meeting on Thursday. Most experts are confident that officials will leave the interest rate at 5.50% but hint at a shift to “dovish” rhetoric in September. This decision looks most likely since the conditions for easing monetary policy are currently practically in place in the US economy. Price pressures are easing, business activity is slowing growth, and the labor market is showing signs of cooling. The June data on the key personal consumption expenditure price index for the regulator showed an increase from 0.0% to 0.1% MoM and a decrease from 2.6% to 2.5% YoY, while the core indicator rose from 0.1% to 0.2% MoM and remained at 2.6% instead of the expected decrease to 2.5% YoY. Experts assume that before the end of the year, the borrowing costs will be adjusted twice by a total of 50 basis points.

Eurozone

EUR is weakening against JPY and USD but has ambiguous dynamics against GBP.

Yesterday, European Central Bank (ECB) Governing Board Member Isabel Schnabel said the regulator has to go “the last mile” in the fight against inflation, as evidenced by persistently high services price growth. At the time of the first interest rate cut in June, some economic data did not fully meet expectations, so further multiple easing of monetary policy may not follow. On Tuesday at 11:00 (GMT 2), investors will pay attention to preliminary data on Eurozone gross domestic product (GDP). According to forecasts, the Q2 indicator will slow from 0.3% to 0.2% MoM and accelerate from 0.4% to 0.6% YoY.

United Kingdom

GBP is weakening against JPY and USD but is ambiguous against EUR.

The June mortgage lending increased to 2.65B pounds and personal loans to 3.816B pounds, confirming the recovery of the UK economy and growing confidence in its prospects among businesses and households. The July CBI retail sales index fell from –24.0 points to –43.0 points instead of the expected –20.0 points. Commenting on these statistics, the department’s chief economist, Martin Sartorius noted, that July was a disappointing month for retailers due to a combination of adverse weather conditions and market uncertainty. It is also noted that British businesses expect a further decline in sales in August.

Japan

JPY is strengthening against EUR and GBP but has ambiguous dynamics against USD.

Investors are preparing for the Bank of Japan’s meeting on Wednesday, where officials may leave the interest rate at 0.10% but discuss the possibility of raising it. The regulator’s economists have recently come under significant pressure from political parties and business representatives demanding further monetary policy tightening. Thus, today, the Supreme Economic Council under the government called on financial authorities to take active action. Experts said the bank should consider the negative consequences of the recent yen weakening, which is slowing consumption and the country’s economic recovery.

Australia

AUD is weakening against USD and has ambiguous dynamics against EUR, GBP, and JPY.

On Wednesday, investors will pay attention to the Q2 inflation data, which could significantly influence the further actions of the Reserve Bank of Australia (RBA) officials. The consumer price index may remain at 1.0% QoQ and increase from 3.6% to 3.8% YoY, above the regulator’s target range of 2.0–3.0%, which will cause another increase in interest rates. Experts are afraid of such a development since further tightening of monetary policy could cause a recession in the economy.

Oil

The market is influenced by opposing factors. On the one hand, investors are concerned about the weakness of the Chinese economy, which could lead to a significant decrease in oil demand. However, the likelihood of a new escalation of the conflict in the Middle East does not allow the asset to fall significantly.

Last week, experts expected a truce to be reached between the Israeli authorities and representatives of the Palestinian movement Hamas. They believed that the situation in the region would stabilize. However, over the weekend, the Lebanese paramilitary organization Hezbollah launched a rocket attack on the Golan Heights, which could cause a new conflict between Israel and Lebanon and disruptions in the supply of Middle Eastern oil to the market.