Today business activity reports in seveal key countries will be published. At the same time, the market remains active after yesterday's FED meeting, which resulted in the dollar strengthening against all major currencies. The market is optimistic, which has a negative impact on the value of safe assets and this situation will continue for sure, at least until the end of the week.
At the very beginning of the day, the manufacturing PMI index of business activity in China was published, which increased by 0.5 pips compared to the previous period, exceeding forecasts. This happened amid the resumption of trade talks between China and the US in late July. According to US officials, the negotiations are going well.
Europe also pleased investors today with the July data on business activity. The PMI stopped its decline and shows a weak growth, remaining below the level of 50 pips. Nevertheless, the index exceeds forecasts in most EU countries, including the UK, as well as in the EU as a whole, and amounted to 46.5 pips against 46.4 pips in June. The key event that investors expect today will be the meeting of the Bank of England in the middle of the day. It is expected that the regulator will leave the rate unchanged, expecting more certainty regarding Britain's exit from the EU in the future.
The second half of the day will be less busy, though we still expect the publication of manufacturing PMI index of business activity in the US and several more countries. The index of employment in the manufacturing sector will also be published, as well as new data on the number of applications for unemployment benefits. There is every reason to believe that the dollar will continue to strengthen after the FED clearly stated that there are no plans for further reductions in the rate. It's unlikely that the upcoming macroeconomic reports will be so disappointing to make the FED quickly revise their plans.
