The dollar continues to stand its ground after some selling from earlier in the week, though is trading little changed so far today as major currencies are lacking any real appetite as we get into European morning trade. Equities rallied strongly yesterday as Wall Street produced a good showing, with the S&P 500 clearing its 100-day moving average to its highest levels in eight weeks. Is this one of those violent bear market rallies or signs of hope of a turnaround in sentiment?
All eyes are set on the US jobs report tomorrow after the Fed stressed on data dependency last week. Fed speakers this week continue to reaffirm that the central bank will not relent in raising interest rates but we will have to see if the data will continue to support that narrative in the weeks/months ahead.
Looking at the agenda in Europe today, the BOE is the key risk event with the central bank largely expected to deliver a 50 bps increase in the bank rate – bringing it to 1.75%. But watch out for any subtle shifts in language – much like the Fed and RBA – as we are moving to that stage of the tightening cycle for central banks, considering the slowing down in the economy. In the case of the UK, high inflation and the cost-of-living crisis are key factors dampening the outlook and could see a more cautious/dovish take by the BOE.
0600 GMT – Germany June factory orders
0730 GMT – Germany July construction PMI
0830 GMT – UK July construction PMI
1100 GMT – BOE announces its August monetary policy decision
1130 GMT – US July Challenger layoffs, job cuts
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.