The United States of America

The American currency is weakening today against the euro and the pound and has ambiguous dynamics paired with the yen.

Investors are focusing on the publication of US July inflation data: on a monthly basis, the consumer price index remained at the same level of 0.2%, and on an annual basis it rose from 3.0% to 3.2%, while the core indicator on a monthly basis it was fixed at 0.2%, and on an annualized basis it corrected from 4.8% to 4.7%. The dollar reacted to the data with a weakening, but soon managed to regain all the lost ground, as investors cannot fully assess the further steps of the US Fed on monetary policy: whether officials will raise interest rates at the September meeting or leave the rate at the same level is still unclear, since the prerequisites for one and the other solution remain. On the one hand, headline inflation rose less than expected, while core inflation fell, but on the other hand, both values are far from the target level of the US Fed, which introduces some uncertainty about the possible actions of the financial authorities. Also today, weekly data from the US labor market were presented, which turned out to be mixed: the number of initial jobless claims amounted to 248.0K, which is higher than the forecasts of 230.0Kand the previous figure of 227.0K, while the total the number of citizens receiving assistance from the state decreased from 1.692M to 1.684M instead of the expected growth to 1.710M.

Eurozone

The European currency is strengthening its position against its main competitors – the USD, the pound and the yen.

In the absence of significant economic releases, the movement of the euro as a whole is driven by external factors. We note the publication of the next economic report from the European Central Bank (ECB), according to which the inflation rate in the euro area is slowing down, but not as much as expected. This circumstance explains the recent increase in the interest rate by the regulator at the meeting on July 27th. Of course, the Governing Council of the ECB will continue to take a statistical approach to determine the appropriate level of borrowing costs. As for the economic prospects for the eurozone, according to officials, they have deteriorated due to weaker domestic demand, which is weighed down by high inflation. This has a particularly negative impact on manufacturing products, while the service sector is more stable, but negative dynamics are also emerging here. The European economy is expected to remain weak in the short term, but a correction in the consumer price index and growth in household incomes may begin to help it recover.

The United Kingdom

The pound is weakening against the euro, but strengthening against the USD and the yen.

In the absence of significant economic releases, the movement of the currency is driven by external factors. Investors are preparing for tomorrow's release of preliminary data on gross domestic product (GDP) for Q2 and expect signs of a recession. The favorable scenario implies that on a quarterly basis the indicator will be 0.0% after rising by 0.1% earlier, and on an annual basis it will remain at the same level of 0.2%, however, against the backdrop of the “hawkish” rhetoric of the Bank of England and faster inflation, slowdown in economic development is not excluded.

Japan

The yen is weakening against the euro and the pound, but has ambiguous dynamics paired with the USD.

Today in Japan, the July data on the price index for corporate goods was presented: on a monthly basis, the indicator rose from -0.1% to 0.1%, less seriously than experts expected (0.2%), and on an annual basis it corrected from 4.3% to 3.6% with a forecast of 3.5%. In general, wholesale inflation in the country continues to slow down for the seventh month in a row, allowing officials of the Bank of Japan to maintain the current course of ultra-soft monetary policy. However, this circumstance disappoints investors who expect the regulator to gradually move towards loosening control over the bond yield curve and increasing interest rates.

Australia

The Australian currency is strengthening against its main competitors – the euro, the yen, the pound and the USD.

Today, the University of Melbourne published data on expected consumer inflation: according to calculations, in August, the figure may decline from 5.2% to 4.9%, but it will still remain quite far from the target range of 2.0-3.0%, while maintaining a high the likelihood of an interest rate hike by the Reserve Bank of Australia at the next meeting.

Oil

Morning growth of oil quotes was replaced by a decline.

The market is under the influence of a number of opposing factors: the upward dynamics is supported by ongoing fears about a drop in the supply of “black gold” due to production cuts by OPEC countries, however, the development of a more rapidly positive trend is hampered by data from the Energy Information Administration of the US Department of Energy (EIA), as well as the possibility of further interest rate increases by the US Fed. According to the EIA report, commercial oil inventories increased by 5.851M barrels, significantly exceeding the expected 0.567M barrels, gasoline stocks decreased by 2.661M barrels, and distillates – by 1.706M barrels.