United States of America
USD is strengthening against its main competitors – EUR, JPY, and GBP.
Investors are focused on the Fed Chairman Jerome Powell's speech at the Jackson Hole Symposium, which is scheduled for 16:00 (GMT+2). The market expects Powell to clarify further actions of the regulator, which so far remain uncertain. At the July meeting, FOMC members decreased the interest rate to 2.25%, and investors hoped that monetary easing would continue but Powell called it corrective and not indicative of a change in course. Most likely, speaking at Jackson Hole, the head of the Fed will be careful and confirm that the regulator will make further decisions based on information coming from the market. A number of FOMC members consider the latest rate cut erroneous. The president of the Federal Reserve Bank of Kansas City, Esther George, said that with a low level of unemployment, rising wages and inflation close to the target level, a rate change was not required.
EUR today is weakening against USD and JPY but moves horizontally against GBP.
Due to a lack of significant economic releases, EUR movement is generally technical in nature. Investors are waiting for Fed Chairman Jerome Powell to speak at the Jackson Hole Symposium and a hint of further action by the US regulator. The market also monitors the development of the political crisis in Italy. After the collapse of the current coalition government and the resignation of Prime Minister Giuseppe Conte, President Sergio Mattarella is actually leading the country and consulting on the creation of a new coalition. It is likely that the new government will form the movement "Five Stars and the Democratic Party of Italy." In this case, early elections will not be needed, and Euroskeptic Matteo Salvini’s Lega movement will not be in power.
GBP is weakening against USD and JPY but moves horizontally against EUR.
Due to a lack of significant British economic releases, GBP movement is technical in nature. The results of the visit of British Prime Minister Boris Johnson to Berlin and Paris were ambiguous. On the one hand, EU leaders left London a chance to conclude a deal and cancel the backstop provision. However, to do this, the United Kingdom must provide alternative options for solving the problem of the Irish border, which the British government so far probably lacks. In addition, a trade deal between the United States and the United Kingdom, which the parties intended to conclude after the country's exit from the EU, was threatened during the week. Senate Congressman Democrat Chuck Schumer promised to oppose any trade deal with Britain if the tough border divides Ireland again.
JPY is strengthening against EUR and GBP but weakening against USD.
Japanese investors are focusing on July inflation data in Japan. Core CPI expectedly remained at the previous value of 0.6%, while the general consumer price index slowed down its growth from 0.7% to 0.5%. The rising of electricity and gas prices were offset by a fall in prices for petroleum products and gasoline. However, government officials note that consumer prices still have a moderate upward trend. Inflation is still far from the target level, which puts pressure on the Bank of Japan and may cause the introduction of additional incentives for the Japanese economy.
AUD is weakening against JPY and USD but moves horizontally against EUR and GBP.
AUD is under pressure of the exacerbation of the US-China trade conflict. Today, the PRC authorities said they would introduce new tariffs ranging from 5% to 10% for US goods worth $75 billion. In addition, the export of American cars will be taxed at 25% duty. Tariffs will be introduced in two parts: from September 1 and from December 15.
Today, oil prices are being corrected downwards.
Quotes are under pressure after reports of a decision by the PRC State Council Commission on Customs Tariffs to impose increased duties on US goods totaling $75 billion, including for cars and parts for them. Such a decision by China indicates an aggravation of the conflict with the United States and an increasing threat to the global demand for energy.
In the evening, the publication of the Baker Hughes report on active oil platforms in the United States of America is expected. The last time their number increased from 764 to 770 units. Continuation of this trend may put pressure on oil quotes.