United States of America

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

Investors are preparing for the key event of the week – the US Federal Reserve meeting. Experts are confident that the regulator will keep the base rate in the range of 5.25–5.50% for the eighth meeting in a row, but at the accompanying press conference, the head of the department Jerome Powell may signal a reduction in the cost of borrowing in September by 25 basis points for the first time in more than four years. It should be noted that futures contracts tied to the US interest rate currently indicate the possibility of a three-fold easing of monetary policy this year, although most experts expect only two interest rate cuts – in September and December. During the day, investors are also awaiting the release of data on the number of open job openings in the labor market (JOLTS): the figure may decrease from 8.140 million to 8.020 million. A decline in the volume of vacancies will confirm the continuing pressure on the labor market, which will increase the likelihood of a decrease in borrowing costs and put pressure on the US currency.

Eurozone

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

Preliminary data on the Eurozone gross domestic product (GDP) for the second quarter were published today, as well as July inflation statistics for Germany. The European economy expanded by 0.3% QoQ, against the forecast of 0.2%, and by 0.6% YoY, in line with market expectations. Output in European countries in general increased by 0.3%, with France and Spain showing better results than expected among the major economies, Italy maintaining its position, while the figure for Germany unexpectedly contracted, which increased fears about a protracted economic crisis in the country. Also noteworthy is that the French economy accelerated by 0.3%, Italy by 0.2%, and Germany contracted by 0.1%. Also today, data on the German consumer price index for July were published: the indicator increased by 0.1% to 0.3% MoM and from 2.2% to 2.3% YoY, exceeding forecasts.

United Kingdom

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

Today, the British Retail Consortium (BRC) released its July data on large-store inflation: the retail price index remained at 0.2% YoY. Prices rose at the slowest pace since October 2021, with a 0.9% drop in non-food prices offset by a 2.3% increase in food prices. Investors are also preparing for the Bank of England meeting scheduled for August 1, the outcome of which seems uncertain: in the context of declining inflation and growing business activity, officials can both leave the key rate at 5.25% and cut it by 25 basis points.

Japan

JPY is weakening against its main competitors – EUR, GBP, and USD.

June data on the labor market was published today: the unemployment rate fell from 2.6% to 2.5% with an unchanged forecast, while the ratio of vacancies to the number of applicants also decreased from 1.24 to 1.23. Investors are preparing for tomorrow's meeting of the Bank of Japan, at which officials are likely to leave the key rate at 0.10% but will discuss the possibility of increasing it. Analysts believe that the narrowing of the gap in indicators between the US and Japan will lead to a strengthening of the yen, but do not expect an increase in borrowing costs before autumn.

Australia

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

June labour market data published today and was weak, with total building permits down 6.5% against preliminary estimates of ˗2.1%, while the figure for private homes fell 0.5%. Investors are preparing for the release of Q2 inflation data tomorrow, which could see the consumer price index remain flat at 1.0% QoQ but rise from 3.6% to 3.8% YoY, remaining well above the Reserve Bank of Australia’s (RBA) target range of 2.0–3.0%. If inflation pressures are confirmed, this could lead to higher borrowing costs, strengthening the Australian dollar.

Oil

Oil prices are pressured today due to growing fears of a weakening economy in China, the world's main oil importer at the moment.

Experts polled by Reuters suggest that the Chinese Manufacturing PMI will decline for the third month in a row, from 49.5 points to 49.3 points, which may lead to a decrease in demand for oil products. Additional pressure on quotes is being exerted by the expectation of the OPEC cartel meeting scheduled for Thursday, at which representatives of exporting countries may begin discussing the cancellation of some current production cuts. Also, during the day, investors are awaiting the publication of weekly data on reserves from the American Petroleum Institute (API): the last time they fell by 3.900 million barrels, and the continuation of this trend may support the trading instrument.