![\"\"](\"\/wp-content\/uploads\/2024\/08\/image-94.png\")
<\/figure>\n\n\n\nGBP \u2013 Easy going week for pound traders<\/h2>\n\n\n\n
Overall the pound seems to have remained supported in the past week, maybe the winner in the FX market as it gains against the USD, EUR and the JPY. On a monetary level, we note the market\u2019s expectations for the Bank of England for two rate cuts until the end of the year. Yet we also note that Reuters in a recent economists poll expects the bank to cut rates only one more time before year\u2019s end. BoE in its last interest rate decision had decided to cut rates in a tight 5-4 majority, while BoE Governor Bailey highlighted the bank\u2019s cautiousness towards cutting rates. Should there be signs which could alter the market\u2019s expectations towards less rate cuts, we may see the pound be supported at a monetary policy level. On a macroeconomic level, we note the release of the August Preliminary PMI figures, with special interest being placed on the services sector. Economic activity seems to have expanded at a faster pace in the UK across sectors, which tends to send a positive signal for the macroeconomic outlook of the UK. We also note the improvement of the August CBI trends for industrial order. The indicator\u2019s reading despite remaining in the negatives, improved more than expected, implying that less UK industrialists are pessimistic for the orders coming in. Overall, we see the pound being supported in the coming week and given the low number of high impact financial releases planned, expect fundamentals to lead the way for pound traders.<\/p>\n\n\n\n For the JPY, BoJ\u2019s monetary policy may be the main factor dictating its direction for the time being. The bank\u2019s hawkish intentions became even clearer after the testimony of BoJ Governor Ueda, before the Japanese Parliament. The market expects the bank to deliver another two rate hikes until the end of the year and we would not be surprised to see the bank delivering what the market asks for. The case for more rate hikes was enhanced during today\u2019s Asian session on a macroeconomic level, as Japan\u2019s CPI rates for July highlighted the persistence of inflationary pressures in the Japanese economy. Overall, we tend to view JPY as being supported on a monetary policy, which in turn may keep JPY shorting at bay for a while. On a macroeconomic level, we note the acceleration of the machinery orders growth rate for June, implying greater trust of businesses to the prospects of the Japanese economy. On the other hand, the country\u2019s trade surplus turned into a deficit in the past month, which by the way was wider than expected, highlighting the outflow of wealth from the Japanese economy through its international trading transactions. In the coming week we highlight Friday as a key day given the slew of high-impact economic data to be released which are related to inflation, supply and demand of the Japanese economy. Other than that we may see JPY setting fundamentals in the driver\u2019s seat.<\/p>\n\n\n\n In the European theatre we highlight the release of the preliminary PMI figures for August on Thursday. The release showcased the weakness of the manufacturing sector in the area. Germany\u2019s as well as France\u2019s manufacturing sectors have suffered another, this time deeper contraction of economic activity, which was reflected on the Eurozone as a whole, as other country members were not able to cover. On the contrary, the services sector seems to have been able to expand economic activity for the month, with tourism being the main driver given the summer, but France\u2019s services sector got a special treat given the Olympics in Paris. Yet tourism as a sector may be considered as too volatile to rely on, while the Olympics should be considered as a one-off event. Hence, we highlight our worries for the area on a macroeconomic level. At a monetary level, the market expects the ECB to continue cutting rates in the coming September\u2019s meeting, while another two 25 basis points rate cuts have been priced in by the market until the end of the year. The market\u2019s expectations may weigh on the EUR given that the interest rates between other central banks and the ECB may start diverging at a faster pace. In the coming week we get the final GDP rate of France for Q2 and highlight the release of the preliminary HICP rates of Germany, France and the Eurozone as a whole. Should the HICP rates slow down, we may see the EUR weakening as the market\u2019s expectations for extensive rate cuts by the ECB could solidify further, while a possible acceleration could send the bank\u2019s rate cutting path into doubt, supporting the EUR.<\/p>\n\n\n\n On a fundamental level, the Aussie got some support given the improved, risk oriented market sentiment of the market. The Aussie tends to gain under such conditions as it is considered a riskier asset in the FX market given its commodity nature. Hence, should the positive market sentiment be maintained in the coming week as well, we may see the Aussie gaining further and vice versa. Also, given its commodity nature we highlight the close Sino-Australian ties, as Australia exports a substantial number of raw materials to China. Given that the Chinese manufacturing sector is struggling to keep economic activity afloat, things are not looking good for the Aussie as well. In the coming week, on the last day of the month we get China\u2019s NBS PMI figures for August and a possible improvement of the indicator\u2019s reading could benefit the Aussie as well and vice versa. On a monetary level, the Aussie remains supported, as RBA maintains a tight financial environment with high rates. The release of the bank\u2019s August meeting minutes highlighted RBA\u2019s decisiveness to lower inflation. In the meeting the bank despite a temptation for another rate hike, decided to keep rates steady for an extended period which could also keep the Aussie supported at a monetary level, given that most central banks are preparing or are already cutting rates. Hence, we highlight the release of Australia\u2019s CPI rates for July on Wednesday\u2019s Asian session and a possible We make a start for the Loonie with fundamentals, as the Canadian National Railways and the Canadian Pacific Kansas City, locked out more than 9000 unionized workers yesterday. The action of the two railway companies practically shut down nationwide freight rail shaking the rails upon which North American supply chains roll. Ottawa has announced swift action, yet the results remain to be seen and the incident seems to have weighed on the Loonie. On a deeper fundamental level, we note that the steep drop of oil prices in the past week, should it be continued in the coming week as well, may have an adverse effect on the Loonie as well given Canada\u2019s status as a major oil producing economy. For the time being the drop of oil prices seems to be related with the easing of market worries for the tensions in the Middle East. Yet should the proposed US ceasefire agreement fall through, we may see oil prices getting asymmetric support, thus providing support for the Loonie as well. On a macroeconomic level we note the easing of inflationary pressures in the Canadian economy for July, given the release of the CPI rates for the particular month. The release seems to have enhanced somewhat the market\u2019s expectations for BoC to cut rates in the coming meeting, while another two rate cuts seem to have been priced in by the market until Christmas. In the coming week, we highlight the release of the GDP rates for Q2 and a possible slowdown could weigh on the CAD as it would imply that the Canadian economy grew at a slower pace, but also may be adding more pressure on BoC to proceed with extensive rate cuts.<\/p>\n\n\n\n As an epilogue, in the FX market we expect the USD to relent some of the initiative to other currencies, given that the gravity and frequency of US high impact financial releases tends to ease. As for US stockmarkets, we note that the earnings season is slowly calming down, yet would like to note the release of the earnings reports of NVIDIA and Hewlett Packard on Wednesday. Overall as mentioned before the positive market sentiment which was witnessed in the past week seems to be related to the market expectations for the Fed to start cutting rates, hence should they be maintained we may see US stockmarkets rising higher. We still maintain our concerns for the US stockmarkets being overpriced though and highlight the risk of an extensive correction lower. As for gold\u2019s price we note that the negative correlation of the precious metal\u2019s price with the USD was interrupted in the past week. Gold traders seem to have booked in some profits after the precious metal\u2019s price reach new record high levels thus allowing the bears to play around. It\u2019s characteristic how the slight recovery of the USD on Thursday exercised substantial pressure on the precious metal\u2019s price. Overall we see signs of the negative correlation between the prementioned trading instruments slowly reviving, hence should we see the USD gaining some ground in the coming week, it could weigh on gold\u2019s price.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2024\/08\/image-95.png\")
<\/figure>\n\n\n\nJPY \u2013 Hawkish BoJ supports JPY<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/08\/image-96.png\")
<\/figure>\n\n\n\nEUR \u2013 August\u2019s preliminary HICP rates in the epicenter<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/08\/image-97.png\")
<\/figure>\n\n\n\nAUD \u2013 Australia\u2019s CPI rates for July in focus<\/h2>\n\n\n\n
acceleration of the rates could restart the discussion for a possible rate hike by the bank thus supporting AUD.<\/p>\n\n\n\n![\"Australia's](\"\/wp-content\/uploads\/2024\/08\/image-98.png\")
<\/figure>\n\n\n\nCAD \u2013 GDP rates for Q2 to move the Loonie<\/h2>\n\n\n\n
![\"Canada](\"\/wp-content\/uploads\/2024\/08\/image-99.png\")
<\/figure>\n\n\n\nGeneral Comment<\/h2>\n\n\n\n