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Euro-Zone industrial sentiment dipped to 3.5 for July from 7.0 previously while the services-sector index retreated to 10.7 from 14.1 in June. Consumer confidence was also confirmed as weaker on the month with the overall business and consumer survey sliding to 99.0 from 103.5. This was below expectations of 102.0 and the weakest reading since March 2021 which maintained a lack of confidence in the Euro-Zone outlook.

The Euro was unable to hold post-Fed gains on Thursday and retreated sharply after the European open. There were further important reservations surrounding the Euro-Zone economy, especially with on-going fears surrounding energy prices and gas supplies. ECB council member Visco also stated that the central bank, so far, has not needed to worry about the exchange rate which dampened confidence and the Euro dipped to lows around 1.0115 against the dollar.  

German consumer prices increased 0.9% for July with the year-on-year inflation rate edging lower to 7.5% from 7.6%, but slightly above market expectations of 7.4%. 

According to the flash data, second-quarter annualised US GDP data was reported at -0.9% compared with expectations of a 0.5% increase and followed a 1.6% contraction for the first quarter. There was a small increase in consumer spending for the quarter despite dip in spending of durable goods. GDP was undermined by another sharp dip in inventories while net exports did secure a net advance for the quarter. Technically, the US economy was, therefore, in recession for the first half of the year which undermined dollar sentiment, although the data will inevitably be revised.

The dollar dipped after the data with the Euro rallying to the 1.0160 area at the European close and securing a further net advance as equities moved higher. The dollar remained on the defensive in early Europe on Friday with the Euro trading just above 1.0200. Month-end position adjustment will lead to choppy trading later in the day.




US initial jobless claims declined slightly to 256,000 in the latest week from an upwardly-revised 261,000 the previous week and slightly above market expectations of 253,000 while continuing claims declined to 1.36mn from 1.38mn. Markets will continue to monitor labour-market trends closely.

Treasures strengthened sharply after the GDP data with the 10-year yield dipping to 3-month lows below 2.70% while the 2-year yield dipped to below 2.90%. Lower yields were crucial in undermining the dollar against the yen with the US currency sliding to below 134.50 while the yen gained strong support on the crosses despite a net advance in Wall Street indices. The dollar continued to lose ground later in the US session while the Euro dipped sharply to lows below 136.50.

There were further concerns over the Chinese growth outlook with the Politburo admitting that the growth targets for 2022 were not going to be met. In this context, the Chinese PMI data will be watched closely over the weekend for further evidence on the economic outlook and will have an impact on global confidence.

US yields continued to decline on Friday which sapped US currency support and the dollar dipped to fresh 1-month lows below 133.00 before a slight recovery.




There were no significant UK developments during Thursday with global trends tending to dominate, although there was some reluctance to sell Sterling ahead of next week’s Bank of England policy decision. Lower US yields were also an important element providing net support for the UK currency.

The FTSE 100 index was unable to respond to Wall Street gains which hampered the UK currency to some extent, especially with markets fretting over the very weak UK balance of payments position which leaves the currency vulnerable if capital inflows are subdued.

Sterling was unable to challenge the 1.2200 area against the dollar and dipped near to lows near 1.2100 in choppy trading before a recovery to above 1.2150. The Euro dipped to fresh 3-month lows just below 0.8350 before a recovery to 0.8380 and Sterling was resilient on the crosses.

Risk appetite held firm on Friday which provided net Sterling support, although there was selling interest close to the 1.2200 level against the dollar.




In comments on Thursday, the Swiss National Bank stated that it can take monetary policy measures at any time between regular meetings if it deems it necessary. The comments increased speculation that the central bank could decide to increase interest rates again ahead of the September policy meeting.

The franc gained fresh support and the Euro dipped sharply to fresh 7-year lows near 0.9700 amid wider selling pressure while the dollar was unable to make headway.

The Swiss currency maintained a robust tone on Friday despite solid risk conditions with the Euro held around 0.9720.


Technical Levels 




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