CAPITALDIGEST, MARKET REVIEW, 22ND AUGUST, 2022
MONDAY 15/8/2022 -STERLING FALLS VS DOLLAR AS FOCUS TURNS TO UK DATA
The British pound fell on Monday against a broadly stronger dollar at the start of a week where traders and the Bank of England (BoE) will get the latest insight into the strength of the labour market and price pressures. Focus is on jobs data on Tuesday and inflation figures on Wednesday, which could give a hint on whether the BoE opts for a second consecutive 50 basis point rate hike at its September meeting.
TUESDAY 16/8/2022- DOLLAR STEADY BEFORE RETAIL SALES, FED MINUTES
The dollar was little changed against a basket of currencies on Tuesday as investors waited on U.S. retail sales and minutes from the Federal Reserve’s July meeting on Wednesday. The greenback has bounced from a six-week low last week as investors ramp up bets that the U.S. central bank will continue to hike rates aggressively as inflation remains persistently high. Trading has been choppy, however, with the Fed not due to meet until Sept. 20-21 and with more consumer price inflation and jobs data due before then.
WEDNESDAY-17/8/2022- STERLING STRUGGLES AS DOUBLE-DIGIT INFLATION DEEPENS GROWTH FEARS
The British pound was steady on Wednesday as data showed inflation climbed to its highest level in more than four decades in July, heaping pressure on the Bank of England to bring down prices but increasing the risk of a sharper economic slowdown. Consumer price inflation rose to 10.1% in July, its highest since February 1982, official figures showed. The increase was above economists’ expectations in a Reuters poll for inflation to rise to 9.8%.
THURSDAY 18/08/2022- DOLLAR BOUNCES AS FED SEEN KEEPING UP AGGRESSIVE RATE HIKES
The U.S. dollar index hit a three-week high on Thursday as investors reevaluated Wednesday’s minutes from the Federal Reserve’s July meeting as more hawkish than originally interpreted and after data showed solid U.S. economic momentum. The dollar pared gains on Wednesday after the meeting minutes showed that Fed officials were concerned the U.S. central bank could raise rates too far as part of its commitment to get inflation under control.
FRIDAY 19/8/2022 -EURO BACK BELOW PARITY VS DOLLAR AGAIN, GAS CRISIS WEIGHS
The euro briefly fell back below parity against a robust dollar on Monday and was languishing at five-week lows, weighed down by concern that a three-day halt to European gas supplies later this month will exacerbate an energy crisis. China’s yuan dropped to its lowest in nearly two years after the central bank cut key lending rates. The dollar index, which measures the greenback against a basket of peers, hit new five-week highs as Federal Reserve officials reiterated an aggressive monetary tightening stance ahead of the Fed’s Jackson Hole symposium this week.