United States of America

USD weakens against EUR and GBP but strengthens against JPY.

The June personal consumption expenditures price index, the key indicator for the US Fed, increased from 0.0% to 0.1% MoM and decreased from 2.6% to 2.5% YoY. The core indicator adjusted from 0.1% to 0.2% MoM and remained at 2.6% YoY, with a forecast of 2.5%, corresponding to the regulator officials’ calculations. They are hinting to investors about the possibility of an imminent start of monetary policy easing. After the publication of statistics, futures contracts linked to the cost of borrowing changed slightly. Traders are still convinced that the interest rate will remain at the same level at the meeting next week and will be cut in September.

Eurozone

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

According to a survey on inflation expectations conducted by analysts at the European Central Bank (ECB), respondents do not expect consumer price growth to slow after four months of positive dynamics. In their view, the indicator will remain around 2.8% over the next twelve months, and average inflation over the next three years could reach 2.3%, against which the regulator’s officials may continue to adjust the interest rate by 25 basis points in September.

United Kingdom

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

Inflation is near the 2.0% target and may fall below it soon. However, the July composite PMI increased from 52.1 points to 52.4 points, maintaining the possibility of a return to negative price dynamics. According to the latest statements from Bank of England officials, there is also no consensus among them on what to do next. Some economists, such as Swati Dhingra, advocate a “dovish” course but his colleagues Catherine Mann and Hugh Pill are not ready. As a result, experts estimate the probability of the interest rate cunt in August at 50.0%.

Japan

JPY is weakening against EUR, GBP, and USD.

The June consumer price index in the Tokyo metropolitan area fell from 2.3% to 2.2% YoY, above the target level, and the core indicator increased from 2.1% to 2.2%, growing for the third month. However, household consumption remains weak, which may push the Bank of Japan to keep interest rates at current levels for a long time. The regulator will meet next week to discuss the monetary policy tightening. Most experts do not expect active measures before autumn, counting on several adjustments to the cost of borrowing before the end of the year.

Australia

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

Next week, investors will pay attention to the inflation data for the second quarter, which can significantly affect the further actions of the Reserve Bank of Australia (RBA) officials: the consumer price index may increase from 3.6% to 3.8% YoY, against which economists may move to tighten monetary policy, which may put pressure on the national economy, causing a recession.

Oil

The price is under the pressure of fears of a slowdown in economic growth in China and, as a result, the possibility of a decrease in demand for energy in the world’s second economy, as well as the likelihood of an early truce between Israel and the Palestinian movement Hamas.

The talks between the two sides have been going on for months but only now have U.S. officials brokering the deal signaled that a six-week ceasefire is in sight. However, the downward dynamics are prevented by the possibility of production cuts in Canada due to large wildfires, declining US commercial oil reserves, and expectations that the US Fed will soon adjust interest rates, supporting the domestic economy and boosting oil consumption.