United States of America

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

Yesterday, August preliminary data on business activity were published, which was ambiguous. The manufacturing PMI adjusted from 49.6 points to 48.0 points, and the service PMI from 55.0 points to 55.2 points, while the composite PMI fell from 54.3 points to 54.1 points, less than analysts expected (53.2 points). In general, business activity is recovering rapidly, reducing the risks of recession even in the context of a “hawkish” monetary policy. Today, investors will pay attention to the speech of the head of the US Fed, Jerome Powell, at the Economic Symposium in Jackson Hole. The official may confirm the likelihood of the interest rate cut cycle starting in September, and possibly hint at the size of the adjustment (25.0 basis points or 50.0 basis points). Most market experts expect that the borrowing cost will be adjusted thrice by –100.0 basis points by the end of the year.

Eurozone

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

The results of the European Central Bank (ECB) survey for July were published today, according to which the majority of households believe that average inflation will be 2.8% over the next 12 months, and may adjust to 2.4% over the next three years, instead of 2.3%, as indicated in the previous survey. Also, the head of the Bank of Latvia Martins Kazaks allowed for two more interest rate cuts this year, as price pressures in the European economy are steadily decreasing.

United Kingdom

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

Market participants are assessing data from the GfK Group consumer confidence index, which assesses the spending of UK residents that is part of economic activity: in August, it consolidated at –13.0 points, reaching a high in almost three years, contrary to forecasts of – 12.0 points. Experts note that the financial situation of the British is recovering, contributing to a change in their views on the state of the national economy. Joe Staton, client strategy director at Gfk Group, noted that households have returned to large purchases again amid a decrease in the mortgage rate in early August.

Japan

JPY is ambiguous against EUR, GBP, and USD.

Today, market participants are analyzing the July inflation data. The national consumer price index remained at 2.8% YoY, compared to preliminary estimates of 2.7%, while the core indicator rose from 2.6% to 2.7%, recording an upward trend for the third month, which increases the likelihood of further monetary tightening by the Bank of Japan. In his comments, the regulator’s head, Kazuo Ueda, reiterated his determination to raise interest rates if inflation reaches the target of 2.0% while emphasizing that market dynamics could affect the forecasts, as well as the timing of the next interest rate adjustments.

Australia

AUD is strengthening against JPY, GBP, EUR, and USD.

Due to a lack of significant economic releases, the movement of the quotes is due to external factors. Discussions on the reform of the Reserve Bank of Australia (RBA) continue in parliament. An independent study conducted last year made several recommendations, including dividing the board of directors into two committees, one of which should deal exclusively with monetary policy, and the second – to focus on other operations. It is also planned to give the government the right to veto decisions of monetary authorities. The head of the Australian Treasury, Jim Chalmers, said today that it is planned to use it only in extreme cases.

Oil

Oil prices added 1.0% today amid a weakening dollar as markets await US Fed Chairman Jerome Powell to confirm a change in monetary policy at the September meeting.

Experts note that a 25 basis point reduction in borrowing costs is already priced in but a sharp easing of incentives could be a catalyst for a faster upward trend. At the same time, according to a Morgan Stanley research note, oil reserves have fallen by about 1.2M barrels per day over the past four weeks, and this trend is likely to continue in the rest of the third quarter. The growth in energy prices could have been more significant if it had not been traditionally held back by concerns about a slowdown in the Chinese economy, as well as the prospects for a peace agreement between representatives of Israel and the Palestinian movement Hamas.