August 01, 2023

Daily Report 01/08/2023

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There was an increase in UK mortgage approvals to 54,600 for June from a revised 51,100 the previous month and above consensus forecasts of 49,000. There was a small net increase in mortgage lending for the month after two consecutive declines while consumer credit increased at a faster rate. Sterling was underpinned by favourable risk conditions during the day, especially with metals prices making headway. There was further position adjustment ahead of Thursday’s Bank of England policy decision.

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The headline Euro-Zone CPI inflation rate declined to 5.3% for July from 5.5% previously and in line with consensus forecasts. The core rate held at 5.5% for the month and slightly above market expectations of 5.4%. The ECB will remain very wary over core inflation trends, especially with services-sector inflation at a record high and the central bank uneasy over the threat of upward pressure on wages. According to provisional data, Euro-Zone GDP increased 0.3% for the second quarter and slightly above expectations of 0.2% with year-on-year growth at 0.6% from 1.1% previously. There were still important reservations surrounding the Germany economy with the government warning over five tough years and this dampened sentiment towards the single currency.

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The US Federal Reserve survey recorded a decline in loan demand and credit conditions are expected to tighten further. There will be important US data releases on Tuesday with the ISM manufacturing index and JOLTS job-openings data. There are expectations that the US manufacturing sector will remain in contraction territory despite a slight monthly improvement while job openings are also expected to slow slightly further.

Key Data 

15.00 ISM Manufacturing PMI (Jul) Exp. 46.8 Prev. 46