What to watch for on Friday, August 5:
The dollar fell against most of its major rivals, ending the day near its recent lows, which is usually a sign of further short-term declines.
Fears of a global recession resurfaced after the Bank of England announced its latest decision on monetary policy. The central bank raised rates by 50 basis points to 1.75%, as expected. But policymakers revised their inflation forecast upwards, while anticipating a recession in the next five quarters. Among other things, Governor Andrew Bailey said that while he understands that raising interest rates will cause financial pain for many, “the alternative is even worse.”
Federal Reserve official Loretta Mester said recession risks have increased in the US, adding that supply problems are likely to persist for some time. Finally, she said that interest rates should continue to rise at least during this year and the first half of 2023.
The GBP/USD pair fell to 1.2064, but recovered 100 pips before the daily close. EUR/USD benefited from dollar weakness in general and settled around 1.0250.
AUD/USD advanced and traded around 0.6970, helped by gold as the shiny metal hit fresh one-month highs in the $1,790 area. The USD/CAD pair rose and traded at 1.2860 as the CAD was hit by falling oil prices. A barrel of WTI is currently trading at $88.40 a barrel.
Lastly, USD/CHF dipped to 0.9550, while USD/JPY dipped to 132.80.
On Friday, the focus will be on US employment figures. The country is to release the non-farm payrolls report, which is expected to show the country added 250,000 new jobs in July. The unemployment rate is expected to hold steady at 3.6%.
Source: Fx Street
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