Daily Wrap Up – 3 August

The Australian dollar erased yesterday's gains and fell significantly against the US dollar today, reaching its lowest level since July 26 at 0.7913, after the Australian trade surplus narrowed in June more than expected, with a surplus of only 856 A$ million. After breaking the ascending channel on the 4 hours chart, the AUDUSD is trying to re-test the broken bullish trend line and is expected with stabilizing below, it would be targeting the support level at 0.7873 then 0.7755.

In the UK, the MPC, by majority 6 to 2 Votes, kept monetary policy unchanged and left interest rates unchanged at historic lows of 0.25%. The committee also voted unanimously in favor of maintaining the asset purchase program at 435 £ bn. Bank of England through inflation report lowered inflation and growth expectations, as uncertainty surrounding the current situation. At the press conference, Mark Carney, Governor of the Bank of England, emphasized the extent of the British economy's damage as a result of Brexit and noted the need to tighten monetary conditions over the next three years. The Pound dropped nearly 140 pips, with the GBPUSD dropping from a nearly one-year high of 1.3266 to currently trade at 1.3125 levels.

In the US, the service sector slowed down in July. The ISM Non-Manufacturing Index fell to 11-month lows at 53.9 points, with most of the index's components dropping, most notably the employment component, which fell to 53.6 from 55.8. The dollar index fell to a daily low of 92.54 before giving up some of its losses and is currently trading at 92.73.