Daily Wrap Up – 1 August

The most significant move today was a drop-in oil prices from a two-month high of 50.40$ a barrel to 48.30$ as ample global supplies countered strong demand, as well as expectations of a continuing fall in US crude inventories.

The decline in oil prices pushed the Canadian dollar lower against its US counterpart, as the USDCAD rose close an important broken support of 1.2540.

Earlier in the day, China's Caixin Manufacturing PMI registered its highest level in 5 months at 51.1 points, and as manufacturing data improved, China's economic growth may continue to grow in the second half of this year.

In Australia, the RBA kept interest rates unchanged at 1.50% for almost a year. The Bank continued to show a neutral tone in the rate statement, but stressed the improvement in the labor market and confidence in its continued improvement and inflation to recover. RBA also pointed to that a rise in the value of the Australian dollar may lead to a slowdown in economic activity, so the Australian dollar falling from daily highs to test the support level at 0.7956.

With new jobs in the British manufacturing sector rising at their highest level in 3 years and increasing production levels, PMI manufacturing grew to 55.1 points, beating market expectations.

The euro has not seen a significant move today and is still trading above 1.18, with eurozone economic growth stable at the second-quarter forecast of 0.6%, quarterly and on an annualized basis, the economy grew by 2.1%, but confidence remains strong in growth prospects despite of the weak growth of the manufacturing sector in the region, and it seems that the way is paved for EURUSD to reach the level of 1.20.

In the US, core Personal Consumption Expenditure Index did not change in June from the previous month. The Core Index rose 1.5% YoY and 0.1% on monthly basis. The ISM manufacturing index slowed down to 56.3 points from 57.8 points in July. The dollar index was trading between 92.60 and 92.90.