After last week’s disappointing super Thursday from the Bank of England and better than expected Non-farm payrolls from the USA which fueled the Pounds fall, It could be poised to rally back up against the US dollar if US inflation data disappoints on Friday.
This morning however, investors have taken cover in safe-haven assets amid dangerous rhetoric between North Korea and the United States.
Sterling was dragged lower on Thursday after the Bank of England lowered expectations of a rise in interest rates as well as lowering the UK’s growth forecasts for 2017. Furthermore, the US Non-farm Payrolls jobs data came in stronger than expected on Friday which fueled the US Dollar to close the week in a stronger position.
Re-surging skepticism that Donald Trump will not be able to push through his economic and tax reforms have put pressure on the US Dollar in recent weeks after the president promised major reforms in these areas to boost the economy.
The US dollar, gained some decent ground yesterday against the Euro and the Pound as well as in the overnight Asia session, has trimmed some of its advances as investors moved into Gold, Swiss Franc, US Treasury bonds and the Japanese Yen. The move into such asset classes comes amid threats of an attack on the US territory of Guam by North Korea after President Trump reportedly said that “North Korea best not make any more threats to the United States” as aggression from Pyongyang would be met with “fire and fury like the world has never seen”.
9.30 am – UK trade balance (June): previous reading was a deficit of £3 billion
1.30 pm – US initial jobless claims (w/e 5 Aug), PPI (July): 240k expected. No change from last month
1.30 pm – US CPI (inflation; June): expected to rise by 0.2 month over month from 0% previously. 1.8% expected for the year over year figure, up from 1.6% previously