In addition to the presented data releases we do have PMI’s for Europe, UK and USA which will provide clues as to how economic growth is dealing with the current pessimism. Better than expected numbers will indicate resilience in the economies and thus fears of recession will abate.
Prospects for a full 1 percentage point rise from the US Federal Reserve took a knock when successive FED Governors suggested that was too much and that 0.75% was more likely when they meet next July 26-27.
The ECB is expected to raise on Thursday with 25bps the most likely outcome but recent weakness in the currency may make 50bps a possibility.
The US$ remains king in FX markets although after the markets took out the options at 1.00 versus the Euro we had a sharp 100 point bounce, however until the rate differentials narrow the US$ will be favoured going forward.
Whilst last weeks numbers in the US were all at the topside of expectations i.e. inflationary and retail sales appear to be holding up, showing consumer strength, petroleum consumption is dropping and as been on three consecutive weeks (by around 2-3%). This is driving season in the US and it appears high prices are causing demand destruction.
Commodity prices were hit as Chinese cities started to lockdown, to varying degrees, which coupled with rate rises increased fears of global recession.
Oil suffered since the market was expecting Biden to have some influence over Saudi oil output, which given Bidens pre-election rhetoric was unlikely to be as easy as some commentators would believe, further OPEC is at maximum capacity hence the oil price had a 2% bounce at the end of the week.
Palladium dropped back sharply after its unilateral rise last week as the market reappraised the possibilities of global slowdown.
Date | Country | Figures | Expected | Previous |
July 19 | GBP | Unemployment Rate | 3.8% | 3.8% |
July 20 | GBP | Inflation Rate YoY | 9.1% | 9.1% |
July 21 | EUR | ECB Interest Rate Decision | 0.25% | 0% |
| USA | Initial Jobless Claims | 245K | 244K |
July 22 | GBP | Retail sales YoY | 2% | -4.7% |
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