<ul><li>In US consumer credit rose $40.15B vs 25.0B est</li><li>revolving credit increased by $14.8B </li><li>Non revolving credit rose by $24.3B</li><li>For the year, revolving credit rose by 14.6% while non-revolving credit increase by 6.9%.</li></ul><p>The month on month volatility is more to the upside. Inflation is impacting the pocketbooks and may be leading to more borrowing to make ends meet. Having said that, balance sheets are stil solid overall. So it is hard to say it is a huge problem, but it may be a concern. </p>

This article was written by Greg Michalowski at www.forexlive.com.

<p>WTI crude oil settled at $89.01, up 47 cents on the day.</p><p>That’s a win for the bulls but certainly not the kind of bounce they were hoping for after yesteday’s breakdown below $90. It wasn’t all bad news though as crude showed some life after a drop to as low as $87.01. </p><p>On the fundamental side, the strong US jobs report undermines the idea that a recession will sap oil demand. The US added 528,000 jobs in July, more than double what economists were expecting.</p><p>Still, it was one of the worst weeks for oil this year. It fell $10 from last Friday’s close and is now up just $10 on the year. Technically, the daily and weekly closes were below a series of March/April lows. The period of consolidation over most of the year has now resolved lower.</p><p>The open question in the week ahead is what is going on with US gasoline demand. I wrote about it here: <a target=“_blank“ href=“https://www.forexlive.com/news/the-data-thats-driving-the-rout-in-oil-prices-is-barely-believable-20220804/“ target=“_blank“>The data that’s driving the rout in oil prices is barely believable</a>. It’s something that oil bulls are talking about non-stop and even made its way to <a target=“_blank“ href=“https://www.zerohedge.com/commodities/very-crooked-numbers-biden-admin-accused-fabricating-gas-demand-data-hammer-price-oil“ target=“_blank“ rel=“nofollow“>ZeroHedge</a>.</p>

This article was written by Adam Button at www.forexlive.com.

<ul><li>Prior was +22.35B (revised to $23.79B)</li><li>Revolving +14.8B</li><li>Non-revolving +25.36B</li></ul><p>Consumers continue to borrow, despite rising rates. That could be a sign of an optimistic consumer or a consumer that can’t afford to pay the bills.</p>

This article was written by Adam Button at www.forexlive.com.

<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/nfp-in-focus-to-wrap-up-the-week-20220805/“>NFP in focus to wrap up the week</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/boes-bailey-interest-rates-are-not-going-back-to-pre-gfc-levels-20220805/“>BOE’s Bailey: Interest rates are not going back to pre-GFC levels</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/boes-pill-should-not-assume-boe-would-raise-rates-by-50-bps-in-september-20220805/“>BOE’s Pill: Should not assume BOE would raise rates by 50 bps in September</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/germany-june-industrial-output-04-vs-03-mm-expected-20220805/“>Germany June industrial output +0.4% vs -0.3% m/m expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/france-june-trade-balance-billion-131-vs-126-billion-expected-20220805/“>France June trade balance billion -€13.1 vs -€12.6 billion expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-july-halifax-house-prices-01-vs-18-mm-prior-20220805/“>UK July Halifax house prices -0.1% vs +1.8% m/m prior</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/china-says-will-sanction-us-house-speaker-pelosi-over-taiwan-visit-20220805/“>China says will sanction US House speaker Pelosi over Taiwan visit</a></li></ul><p>Markets:</p><ul><li>USD leads, AUD lags on the day</li><li>European equities lower; S&P 500 futures flat</li><li>US 10-year yields up 0.4 bps to 2.694%</li><li>Gold down 0.3% to $1,786.43</li><li>WTI crude down 0.4% to $88.19</li><li>Bitcoin up 3.6% to $23,320</li></ul><p style=““ class=“text-align-justify“>It was a quiet session in Europe today as all eyes are fixed on the US jobs report later today.</p><p style=““ class=“text-align-justify“>Equities were tepid while bonds also showed little appetite to chase any moves on the day. In the major currencies space, the dollar is steady amid narrow ranges with some light extension without much direction in general.</p><p style=““ class=“text-align-justify“>Most dollar pairs are observing small changes with only USD/JPY being a notable mover in Asia, climbing to 133.45 before falling back to 132.90 in Europe and then settling around 133.10 currently. That isn’t indicative of much as the pair continues to see some large swings below 135.00 on the week.</p><p style=““ class=“text-align-justify“>A placeholder session best describes the last eight to ten hours as we count down to the US non-farm payrolls to provide some final action before the weekend.</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>For those following the oil market closely, it is hard to believe that there is such a compelling argument that oil prices should move lower significantly. Yet, markets are acting that way based on data which may not actually be credible. Adam provided a very comprehensive overview on that yesterday <a target=“_blank“ href=“https://www.forexlive.com/news/the-data-thats-driving-the-rout-in-oil-prices-is-barely-believable-20220804/“ target=“_blank“>here</a>. It is a must read if you’re looking into what’s driving the oil market at the moment.</p><p style=““ class=“text-align-justify“>As much as conditions remain tight and supply from most key producers are at capacity, adding to the fact that global inventories are low, oil prices haven’t shown much confidence since the middle of June. In fact, prices look set for another weekly decline that will make it a drop in 7 out of the past 9 weeks.</p><p style=““ class=“text-align-justify“>I wouldn’t doubt that there are still plenty of oil bulls around. I for one am still in that camp but as a trader, you always have to respect the technicals. That is the number one rule as that is how you define and limit your risk.</p><p style=““ class=“text-align-justify“>The picture above is rather bleak for oil, to say the least. The break back below $90 and a drop below both its 100 and 200-day moving averages is suggesting that selling pressures are picking up and there is potentially more downside to follow. Sellers are in control now and sentiment is leaning more bearish. I wouldn’t want to be fighting that, as much as I believe oil prices are going to come back.</p><p style=““ class=“text-align-justify“>The trendline support (yellow line) is the next key level to watch and that holds closer to $80 before we get to the figure level itself. A further drop below that will leave very little in the way of a plunge back towards the December lows closer to $63 to $65. I would argue that might be where oil may look like a fire sale but we’ll have to see how market sentiment continues to play out before jumping to any firm conclusions.</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li style=““ class=“text-align-justify“>We’re trying to ensure there’s an element of flexibility given the uncertainties we face</li><li style=““ class=“text-align-justify“>We need flexibility either to go further, or to stay where we are</li><li style=““ class=“text-align-justify“>The pace at which we go further can vary according to circumstances</li><li style=““ class=“text-align-justify“>Rejects criticism that BOE had been behind the curve in stopping inflation surge</li><li style=““ class=“text-align-justify“>Investors should not assume September would also be a 50 bps rate hike</li></ul><p style=““ class=“text-align-justify“>This was already communicated by Bailey in his press conference yesterday but Pill is providing a bit more colour to it. That said, the statement in itself was already rather clear after the BOE took a page out of the RBA’s playbook in saying that „policy is not on a pre-set path“. We’re into the second-half of the central bank tightening cycle now i.e. where the early aggression and frontloading is being dialed back as economic conditions worsen. For central banks, it is about trying to navigate a ’soft landing‘.</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>There’s not much going on as market participants have little appetite to go chasing any moves before we get to the US jobs report later today at 1230 GMT. Dollar pairs are trading within 20 pips of each other, not really hinting at much with the greenback steadier amid narrow ranges at the moment. Here’s a snapshot of things:</p><p style=““ class=“text-align-justify“>USD/JPY is a bit of a mover with a drop from 133.45 to 132.90 at the moment but volatility in the pair has increased this week upon a break back below 135.00. The low this week came close to test the 100-day moving average at 130.27 earlier in the week (now seen at 130.67) and that remains a key support level to watch. Meanwhile, topside is still more limited closer to 135.00 in the big picture.</p><p style=““ class=“text-align-justify“>The bond market is also keeping calmer, off the highs from the Tuesday and Wednesday surge. 10-year Treasury yields are at 2.68%, little changed, down from the high of near 2.85% from two days back.</p><p style=““ class=“text-align-justify“>Elsewhere, EUR/USD price action remains defined between 1.0100 and the 50.0 Fib retracement level at 1.0283. GBP/USD fell off after the BOE policy decision yesterday but staved off a steeper decline near short-term support at 1.2063-65. Then, we still have AUD/USD which continues to keep below 0.7000 as risk sentiment fluctuates and the aussie itself also falling after the RBA hinted at the potential for a slower pace of rate hikes on Tuesday.</p><p style=““ class=“text-align-justify“>All eyes are on the NFP now. It can’t come soon enough.</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>I doubt Pelosi has any plans to visit China but she would arguably be the highest ranking US official to be barred from entering the country.</p>

This article was written by Justin Low at www.forexlive.com.

Headlines:

• BOE raises bank rate by 50 bps to 1.75%, as expected
• BOE’s Bailey: UK forecast to enter recession later in the year
• Pound tumbles as BOE warns of dire economic outlook
• Saudi Arabia, UAE to save spare oil capacity in case of a supply crisis in the winter
• Germany June factory orders -0.4% vs -0.8% m/m expected
• Germany July construction PMI 43.7 vs 45.9 prior
• UK July construction PMI 48.9 vs 52.0 expected

Markets:

• AUD and NZD lead, GBP lags on the day
• European equities higher; S&P 500 futures up 0.1%
• US 10-year yields up 0.8 bps to 2.714%
• Gold up 1.1% to $1,783.38
• WTI crude up 0.4% to $90.08
• Bitcoin down 1.8% to $22,901

The BOE policy decision was the main event on the session and it did not really disappoint. Well, unless you’re betting on the pound that is. The risks coming into the meeting was skewed to the downside and with the BOE warning of the longest recession since the global financial crisis and also providing a subtle shift in guidance à la the RBA i.e. „not on a pre-set path“, sterling tumbled and is being pressured lower with the BOE press conference ongoing.

GBP/USD was trading around 1.2175 going into the decision but has now fallen by over 100 pips to 1.2070 on the day. Bailey’s mention of September not being a guarantee for a 50 bps rate hike has dragged the quid lower in the past half-hour.

Meanwhile, the dollar is mostly little changed with some light pushing and pulling awaiting the US jobs report tomorrow. The aussie and kiwi are slightly higher but the gains aren’t anything to shout about. Some key levels outlined here.

Elsewhere, equities are holding up with European indices posting modest gains after a decent advance yesterday. That is in part catching up to the Wall Street rally and US futures are also mildly higher on the day now after some flattish trading earlier.

Casting the BOE aside, markets are calmer and the mood is more measured as we settle down and look towards the US non-farm payrolls release tomorrow.

This article was written by Justin Low at www.forexlive.com.

• Near-term inflationary pressures have intensified significantly
• The uncertainty surrounding the outlook is exceptionally high
• Labour market may only lossen slowly in response to falling demand
• But unemployment is expected to rise starting from next year
• All options are on the table for September meeting and beyond
• What we do at this meeting isn’t indicative of what we are going to do moving forward
• A 50 bps rate hike today does not mean we are on a pre-determined path to raise by another 50 bps

The pound is slipping to the lows for the day now with cable dropping to 1.2080 on his comments about not being on a pre-determined path. I believe this was made clear from the statement when they said that they are not on a pre-set path but markets are reacting now to price that in further.

/GBP

This article was written by Justin Low at www.forexlive.com.