United States of America

USD is weakening against JPY and GBP but has ambiguous dynamics against EUR.

The July preliminary manufacturing PMI sector fell from 51.6 points to 49.5 points, entering the stagnation zone. However, the service PMI increased from 55.3 points to 56.0 points instead of the expected 54.7 points. It led to a correction in the composite PMI from 54.8 points to 55.0 points, confirming the resilience of the American economy to the US Fed’s tight monetary policy. According to a poll of leading economists conducted by Reuters, most respondents believe that the American regulator will cut interest rates twice this year, in September and December but sustainable growth in consumer demand will require caution from officials, despite the continued slowdown in the consumer price index.

Eurozone

EUR is weakening against GBP and JPY but has ambiguous dynamics against USD.

Preliminary July EU business activity data did not meet experts’ expectations. The manufacturing PMI fell from 45.8 points to 45.6 points with a forecast of 46.0 points, and the services PMI from 52.8 points to 51.9 points against 52.9 points, leading a correction in the composite PMI from 50.9 points to 50.1 points. The German manufacturing and services PMI adjusted from 43.5 to 42.6 and from 53.1 to 52.0, respectively, bringing the composite indicator from 50.4 to 48.7, back in the red for the first time since March. It reflected the slowdown in the European economy but raised the prospects of interest rate cuts by European Central Bank (ECB) officials in September and December. The August GfK Group consumer climate index increased from –21.6 points to –18.4 points, beating estimates of –21.1 points, as inflation slowed and household incomes recovered due to higher wages.

United Kingdom

GBP strengthens against EUR and USD but weakens against JPY.

The July preliminary service PMI increased from 52.1 points to 52.4 points against the forecast of 52.5 points, the manufacturing PMI from 50.9 points to 51.8 points, and the composite PMI from 52.3 points to 52.7 points. The indicators are recovering from a period of uncertainty associated with the parliamentary elections in the country, which can contribute to the acceleration of gross domestic product (GDP) growth. However, most experts are confident that Bank of England officials will not begin active actions before autumn.

Japan

JPY is strengthening against EUR, GBP, and USD.

The July the preliminary manufacturing PMI sector fell from 50.0 points to 49.2 points, entering the stagnation zone. However, the service PMI increased from 49.4 points to 53.9 points, leaving the red zone and leading to an increase in the composite PMI from 50.0 points to 52.6 points. It allows experts to count on further economic recovery, as well as a tightening of monetary policy by the Bank of Japan. According to Reuters, at the next meeting of the regulator on July 31, economists will discuss the issue of raising interest rates and present a plan to reduce bond purchases in the coming years twice. It reflects the intention of the monetary authorities to complete large-scale monetary stimulus gradually.

Australia

AUD is weakening against EUR, JPY, GBP, and USD.

The July preliminary manufacturing PMI increased from 47.2 points to 47.4 points, remaining in the stagnation zone, the service PMI fell from 51.2 points to 50.8 points, while the composite PMI adjusted from 50.4 points to 50.2 points. The indicators continue to grow, although slower than before. It does not allow the Reserve Bank of Australia (RBA) officials to ease the monetary policy, and most experts expect the first interest rate reduction next May-August.

Oil

Oil prices are growing moderately.

Positive dynamics are developing against the weekly report on the US oil reserves from the American Petroleum Institute (API), which reflected a correction of –3.900M barrels compared to forecasts of –2.470M barrels. The value has been falling for the fourth week, confirming the high oil demand in the leading world economy. However, the high probability of a truce between representatives of the Israeli government and the Palestinian movement Hamas prevents a more rapid pace. US President Joe Biden and Israeli Prime Minister Benjamin Netanyahu will discuss the details today. In addition, investors will pay attention to data on oil reserves from the Energy Information Administration of the US Ministry of Energy (EIA). The value may change to –2.600M barrels, supporting oil prices.