August 02, 2022

Daily Report 02/08/2022

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Investors remained focusing on the interest rate decision by the Bank of England on Thursday. As per the market consensus, BOE Governor Andrew Bailey is expected to raise the interest rate by 25 basis points, although here are some predictions for a 0.5% increase.. A less-hawkish commentary from the BOE will keep the pound bulls on tenterhooks. Average Hourly Earnings have remained lower in the UK area, which resulted in a slump in Retail Sales. In the race to be the next British PM, Liz Truss is looking increasingly likely to move into number 10 as Penny Mordaunt has now thrown her support behind her.

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Investors await the release of the Retail Sales data tomorrow. A preliminary estimate for the Eurozone Retail Sales is -1.7%, which would be a major fall on the previous reading of 0.2%. Households in Europe are facing the headwinds of higher price pressures, which are forcing them to higher consumption expenditure despite a minor change in quantity purchased. Therefore, the Retail Sales data should be higher. A lower estimate for the economic demand indicates a serious fall in the retail demand.

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Market sentiment is turning jittery on the escalation of US and China tensions ahead of the arrival of US House of State Nancy Pelosi in Taiwan. It has been reported that some military activity by Chinese warplanes has been observed around the median line of the Taiwan strait. Also, China’s General Administration of Customs suddenly banned the import of more than 100 food products from Taiwan. The ongoing concerns have put the Dollar on the backfoot. On the data front, the ISM Manufacturing PMI for July came in at 52.8, beating expectations of 52 although it was lower than the June reading of 53.

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