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Markets digest key data points

Daily Currency Update

Yesterday we saw the release of the US Philadelphia Fed Manufacturing Survey which marked the strongest print since April 2022, rising to a reading of 12 compared to market forecasts of -9.8. the US Initial Jobless Claims also came in better than expected, edging lower to 239k versus a 250k reading in the previous release and just beating market forecasts of 240k.

Several banks including the likes of UBS are looking at the Dollar’s upside to be limited after the meeting minutes. The reason being, although only two FED members were in favor of a pause in rate hikes and the rest had a more positive stance, the rhetoric around the minutes was very much data-dependent on showing tentative signs, and instead, analysts are suggesting the EUR is the more favorable currency in the coming weeks. This may be due to a stronger German ZEW data set which tames fears of a recession along with the poorer data releases from the Eurozone already being priced into the market.

Key Movers

The Eurozone trade balance came in on a positive note yesterday, growing to 12.5 billion Euros compared to the 3.8 billion forecasted.

Looking ahead for today, we’ve got the final readings or Eurozone CPI data at 10 am along with a speech from ECB Chief Economist, Philipe Lane which will be one to watch as the topic is around the role of how banks should fight inflation which could provide forward guidance on what the ECB’s next move looks like.

UK Retail Sales came this morning at -1.2% YoY in July versus -0.6% expected with Core Retail Sales which excludes fuel slumping to -3.4% compared to -2.2% forecasts. The cost-of-living crisis continues to bite at UK consumers as the volume of retail sales continues to reflect the struggles consumers are currently facing and off the back of this, we’ve seen the pound sell off this morning.

Next week we’ve got more German data being released, Manufacturing and services PMI’s for all Eurozone, UK, and the US but the main thing markets will be watching is the Jackson Hole Symposium which is running from Thursday through to Saturday.

Expected Ranges

  • GBP/USD: 1.27072 - 1.27657 ▼
  • GBP/EUR: 1.16850 - 1.17255 ▼
  • GBP/AUD: 1.98260 - 1.99260 ▼
  • EUR/USD: 1.08644 - 1.08939 ▼