![\"\"](\"\/wp-content\/uploads\/2024\/08\/image-37.png\")
<\/figure>\n\n\n\nGBP \u2013 GDP rates next week<\/h2>\n\n\n\n
On a fundamental level, the UK\u2019s political scene is looking shaky, with numerous riots taking place in the nation.On a macroeconomic level, we note the UK\u2019s final composite and services PMI figures for July exceeded expectations, implying a greater than expected expansion of the UK economy from a services and general standpoint, which may have aided the pound. In addition, the UK\u2019s construction PMI figure for July also exceeded expectations implying also an expansion in the construction sector of the economy, which also appeared in the Halifax house price index rate for July which also came in higher than expected at 0.8%. Overall, the financial releases stemming from the UK tend to point a positive picture and pound traders may be looking for that momentum to be carried into next week, where we are set to receive the UK\u2019s CPI rates for July and preliminary GDP rates for Q2. In the event that the GDP rates come in higher than the prior rates, it may imply that UK economy is expanding and thus the economic situation in the UK could be improving. For the CPI rates, should they come in higher than expected, it may imply that inflationary pressures in the UK economy may have not subsided and thus could increase pressure on the bank to keep interest rates steady rather than continuing on their monetary policy easing cycle. Furthermore, should the CPI rates showcase an acceleration of inflationary pressures, the bank\u2019s 25bp cut last week may be considered premature. On the flip side, should the CPI rates showcase easing inflationary pressures in the UK economy, it may validate the bank\u2019s decision to but interest rates and may embolden them to continue on their current path. Overall, next week is set to be crucial for pound traders, as key financial releases are due.<\/p>\n\n\n\n We continue to maintain our view that there may be more way to go to push the JPY higher, yet that remains to be seen. On a monetary level The BOJ\u2019s summary of opinions for their July meeting was released earlier on this week. Within the statement, it appears that BOJ policymakers debated on whether or not to raise the monetary policy rate even further, having stated that \u201cThe current economic situation seems to be favorable enough that the Bank can raise the significantly low policy interest rate to some degree\u201d. The mention that the interest rates are \u201csignificantly low\u201d tends to imply a willingness by the bank to raise rates more aggressively, which in turn may aid the JPY. However, the recent developments in which the carry trade appears to be unwinding, in combination with some concerns about the \u2018health\u2019 of the global financial markets, may disrupt the BOJ\u2019s ambitions. Moreover, in the SOP the neutral rate \u201cseems to be at least around 1%\u201d. Nonetheless, the overall document appears to have been hawkish in nature. On the other hand, BOJ deputy Governor Uchida during his remarks earlier on today downplayed the possibility of near-term hikes, with Reuters citing the Deputy Governor having said that \u201cWe won\u2019t raise interest rates when financial markets are unstable\u201d, implying that the recent market volatility is not favorable for the bank and thus appears to contradict the bank\u2019s summary of opinions. For next week, we would take a look at Japan\u2019s GDP rate for Q2 which is set to showcase an expansion of the Japanese economy and thus could further aid the JPY. On the flip side should it showcase a contraction it may have the opposite effect.<\/p>\n\n\n\n On a fundamental level for EUR traders we note that the EU\u2019s artificial intelligence act is now officially enforceable since Thursday.On a monetary level, we note that ECB as was widely relatively quiet this week and as such we will focus more on the macroeconomics. As such we turn our attention to Germany\u2019s and France\u2019s respective Services and Composite PMI figures for July which were released alongside each other. Starting with France their composite and services PMI figures came in lower than expected, whereas the opposite occured for Germany who’s composite and services PMI figures exceeded expectations . As such attention may turn to the release off the Eurozone\u2019s preliminary GDP rates for Q2 next week, in order to gain greater clarity of the economic situation in the zone as a whole. The current expectation for the preliminary GDP rate for Q2 on a qoq basis is 0.3% which would be identical to the prior quarters GDP rate of 0.3%, thus implying an expansion in the zone\u2019s economy. Such a scenario may provide support for the EUR . On the flip side should the preliminary GDP rates showcase a contraction of economic activity in the Eurozone, it could instead weigh on the EUR. Moreover, of secondary interest may be Germany\u2019s ZEW economic sentiment and current conditions figures for August which are due out on Tuesday, as a gauge of the consumer perspective of the Germany\u2019s economic situation.<\/p>\n\n\n\n On a macreconomic level, we note that Australia\u2019s service PMI came in lower than expected at 50.4, implying that Australia\u2019s services sector of the economy expanded but at a slower pace than what was expected, which may imply that the services sector of the economy is slightly shaky. Nonetheless, the highlight of the week was the RBA\u2019s interest decision in which the bank remained on hold, as was widely expected. As a reminder, AUD OIS in our last weekly report implied a 93% probability for the bank to remain on hold, yet the most interesting aspect of the bank\u2019s decision was RBA Governor Bullocks press conference following the decision. In particular, RBA Governor Bullock stated that the bank is willing to raise interest rates should inflationary readings deviate from forecasted figures. Moreover, RBA Governor Bullock allegedly stated that a rate cut is not in the agenda in the near term, further enhancing the hawkish rhetoric that appears to have emerged from the bank. As such the bank\u2019s hawkish rhetoric may aid the Aussie should it be maintained. For next week, we would also take a look at Australia\u2019s employment data, where should it showcase a resilient labour market, it may aid the AUD and vice versa. We also note, as usual the deep economic ties between Australia and China on a fundamental level. Hence we that the release of China\u2019s industrial output rate for July which is expected to increase to 5.5% from 5.3%, which may also aid the AUD, as it could imply an increase in raw materials stemming from Australia.<\/p>\n\n\n\n In Canada, the Ivey PMI figure for July, came in lower than expected, which may imply that the manufacturing sector of the Canadian economy continues to expand, but at a slower pace than expected which could weigh on the Loonie should other financial releases imply a possible slowdown of manufacturing activity. As such, of Canada\u2019s employment data which has yet to be released at the time of this report, may take an even greater importance, as should it showcase a loosening labour market, it may weigh on the Loonie and vice versa. On a fundamental level, we note that the recent geopolitical tensions stemming from the Middle East remain elevated which may aid oil prices and could provide some support for the CAD given Canada\u2019s status as an oil exporting nation.<\/p>\n\n\n\n As a closing comment, in the FX market we expect the USD to ceede some of its influence over other currencies as the frequence and gravity of US financial releases decreased. As for US stockmarkets, we note that that the unwinding of the carry trade and concerns about a recession in the US tended to weigh significantly on all three major indexes at the beginning of the week. We still maintain our concerns for the US stockmarkets and will continue to monitor them in the following week.As for gold prices we note that the lack of a significant military escalation between Israel and Iran may have led to some safe haven outflows, yet tensions still remain high and could quickly change over the weekend.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2024\/08\/image-38.png\")
<\/figure>\n\n\n\nJPY \u2013 BOJ hesitation after heightened market volatility<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/08\/image-39.png\")
<\/figure>\n\n\n\nEUR \u2013 GDP rate for the zone next week<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/08\/image-40.png\")
<\/figure>\n\n\n\nAUD \u2013 RBA opens the door for a rate hike<\/h2>\n\n\n\n
![\"Australia's](\"\/wp-content\/uploads\/2024\/08\/image-41.png\")
<\/figure>\n\n\n\nCAD \u2013 Building permits next week<\/h2>\n\n\n\n
![\"Canada's](\"\/wp-content\/uploads\/2024\/08\/image-42.png\")
<\/figure>\n\n\n\nGeneral Comment<\/h2>\n\n\n\n