GBP>EUR – 1.1113
GBP>USD – 1.3065
EUR>USD – 1.1752
GBP>CAD – 1.7536
GBP>AUD – 1.8373
GBP>SEK – 11.460
GBP>AED – 4.7980
GBP>HKD – 10.121
GBP>ZAR – 22.560
|This Week’s Calendar
· AUD Trade Balance (Jun)
· UD RBA Rate Statement
· USD ISM Non-Manufacturing PMI(Jul)
· GBP Bank of England Monetary Policy Report
· GBP Monetary Policy Summary
· GBP Bank of England Minutes
· GBP BoE’s Governor Bailey speech
· AUD RBA Monetary Policy Statement
- USD sentiment on dollar reaches Bearish extremes
- GBP Eyes on UK Manufacturing PMI’s for direction
- Week Ahead can Non-Farm payrolls halt the Dollar’s descent?
- Eyes On BoE for Super Thursday.
Cable has put in some distance from Friday’s 1.3171 trend peak in pulling back to a low at 1.3057. A rebound in the U.S. currency has been at play. The UK currency outperformed last week, though still registers as the weakest of the main currencies on the year-to-date, and by some distance in trade-weighted terms, while recent dollar underperformance has been somewhat flattering the pound. Nevertheless, there are some convincing bullish arguments in market narratives. One is the pick-up in the pace of economic recovery in the UK, as evidenced by the much stronger than forecast preliminary July PMI data and improvement in the CBI’s July distributive sales report, which flagged a nearly full recovery in the retail sector, with sales in upcoming months seen at near seasonal norms. There have also been signs that have led markets to factor improved odds for an EU-UK trade deal, with several sourced press reports suggesting that discussions are going better than the official line suggests. There is now summer a hiatus in negotiations, which will resume on the week of August 17th. We see scope for Cable returning to levels around the 1.3500 mark.
The dollar has lifted, with the narrow trade-weighted USD index posting its best level since last Thursday, at 93.70, extending a rebound from the 25-month low that was seen on Friday at 92.55. EUR-USD concurrently ebbed to a below Friday’s low on route to a low at 1.1741, extending the correction from Friday’s 26-month peak at 1.1910. Cable similarly put in some distance from Friday’s 1.3171 trend peak in pulling back to a low at 1.3057. USD-JPY printed a 10-day peak at 106.43, which is over 2 big figures up on Friday’s five-month low at 104.18. AUD-USD descended to 0.7118, which is the pair’s lowest level since last Tuesday and extends correction from the 17-month peak that was seen on Friday at 0.7229. USD-CAD has traded firmer, though has remained within its Friday range, posting an intraday high at 1.3429. Oil prices are trading relatively steadily, above Friday’s correction lows. Gold prices hit a fresh nominal record peak soon after the open in Asia-Pacific markets today, at $1,994.20, before capping out and settling to near net unchanged levels under $1,980.00. Stock markets in Asia have been mixed, while S&P 500 futures decline moderately. Japan’s Nikko 225 outperformed, closing with a 2.2% gain, buoyed by the bounce in USD-JPY, while the MSCI Asia-Pacific index (ex-Japan) ebbed by 0.5%. In news, the U.S. Congress is struggling to finalize a new fiscal relief package, despite pandemic-era unemployment benefits having expired on Friday. The impact of lockdown measures in response to the coronavirus remains a concern, too, although the media and many governments continue studiously overlooking the evidence of herd immunity developing in places where it has run its course (and not to mention that the SARS Cov-2 coronavirus, while highly contagious and bad news for the vulnerable, is not anywhere near avirulent for the broader population as feared back in March).
XE Market Analysis Europe – 3rd Aug 2020
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