July 24, 2023

Daily Report 24/07/2023

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Sterling was unable to make headway in Europe on Friday. The UK currency dipped to lows against the dollar but managed to recover some ground later in the session as risk conditions improved with gains in equities. CFTC data recorded a further increase in long, non-commercial Sterling contracts to over 63,500 in the latest week from just over 58,000 the previous week and the largest long position for over 7 years. The data was collated on July 18th, just after the latest UK inflation data and there is scope for an unwinding of long positions since then. The overall positioning will be a barrier to fresh Sterling buying in the short term, especially if data releases are disappointing.

Key Data 

9.30 S&P Global Composite PMI (Jul) Exp. 52.4 Prev. 52.8
9.30 S&P Global Manufacturing PMI (Jul) Exp. 46.1 Prev. 46.5
9.30 S&P Global Services PMI (Jul) Exp. 53 Prev. 53.7

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Relatively tight ranges prevailed on Friday with a lack of fresh data and major central bank developments. The Euro was unable to make any headway and retreated to lows against the Dollar with expectations of hawkish Fed rhetoric. CFTC data recorded a jump in long, speculative Euro contracts to near 180,000 in the latest week from 140,000 previously and the largest long position for two months. The ECB is expected to increase interest rates by 25 basis points with the refi rate at 4.25%. There is an important element of uncertainty over the September decision with the bank likely to insist that it will be data dependent.

Key Data 

9.00 HCOB Composite (Jul) Exp. 49.7 Prev 49.9
9.00 HCOB Composite (Jul) Exp. 43.5 Prev 43.4
9.00 HCOB Composite (Jul) Exp. 51.5 Prev 52

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The Federal Reserve will announce its policy decisions this week. There are very strong expectations that the Fed will increase interest rates by a further 25 basis points at this meeting. Markets expect that there will be no further rate hikes beyond this month, but the consensus of Fed forecasts released in June was that there would be another hike beyond July and the US central bank will be wary over adjusting guidance significantly.

Key Data 

14.45 S&P Global Manufacturing PMI (Jul) Exp. 46.4 Prev. 46.3
14.45 S&P Global Services PMI (Jul) Exp. 54.1 Prev. 54.4