BOE the key highlight on the agenda today
The dollar is holding its ground so far on the day, maintaining the bounce from yesterday after Fed vice chair Clarida helped to spur some upside in the greenback.
His comments were a confirmation of what we already know but he indicated an openness to tapering by the end of the year if there is "substantial further progress". Adding that perhaps rate hikes may come along in 2023 as planned. In case you missed it:
- Fed Clarida: Expects conditions for raising rates to be met by end of 2022
- Clarida Q&A: I have been surprised by the fall in yields
USD/JPY got a decent bounce off that and is tracking higher again today as price works its way past the 100-day moving average @ 109.59.
Besides that, major currencies aren't doing a whole lot going into Europe as we start to settle into the typical pre-NFP lull ahead of tomorrow's US jobs report.
The BOE will provide a key risk event for the pound but given the slight setback to recent data, it is likely that policymakers will stay away from any hawkish tilt for now.
0600 GMT - Germany June factory orders data
Prior release can be found here. German industrial orders are expected to bounce back in June after a drop in May, which should reaffirm some added resilience and optimism in the manufacturing sector despite more tepid foreign demand.
0730 GMT - Germany July construction PMI
Prior release can be found here. Construction activity is likely to be hampered by supply chain disruptions and high cost inflation once again, which will remain the case for many more months to come.
0830 GMT - UK July construction PMI
Prior release can be found here. UK construction output is estimated to hold up at elevated levels after the June surge, though supply disruptions may bite at growth strength in the months ahead.
1100 GMT - BOE announces August monetary policy decision
Prior decision can be found here. It is going to be a testing time for the BOE as they are likely to stick with trying to strike a more optimistic tone in general but remain cautious about sending too hawkish a signal when it comes to ending QE or stirring up any discussion on raising rates in general. Recent inflation pressures certainly is making the BOE's job tougher but they are likely to stick with the view of things being more 'transitory' still. All things considered, there is a high threshold for the BOE to offer any serious hawkish indications but there is an off-chance for that so just be wary.
1130 GMT - US July Challenger job cuts, layoffs
The data provides information on the number of announced corporate layoffs by industry and region and acts as a general labour market indicator.
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.
