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Goldman Sachs believes that the US support for Japans yen is unlikely to damage the dollars status as the worlds primary reserve currency. Japan is the largest foreign investor in the $31 trillion US Treasury market. Following the joint US-Japan currency intervention last month, some concerns arose that foreign exchange intervention aimed at preventing sharp fluctuations in the US bond market would weaken market confidence in the dollar as a reserve asset. Goldman Sachs stated that such views are based on the assumption that the US might try to prevent other countries from selling US Treasury bonds in the future. "This seems somewhat far-fetched," strategists, including Michael Cahill, wrote in a report. "We do not agree with the view that this action will damage the dollars reserve currency status."On August 7th, the Beijing Economic-Technological Development Area Administrative Committee issued a notice regarding the "Several Measures (Trial) of Beijing Economic-Technological Development Area on Supporting the High-Quality Development of Intelligent Economy Driven by Word Elements." The notice mentions increasing support for the research and development of dedicated inference chips, and continuously iterating on key core technologies such as advanced packaging, co-packaged optics, high-speed optical interconnection, and optical communication. It also emphasizes accelerating the deep integration of photonic computing with traditional computing power systems to comprehensively improve the parallel processing capabilities of large-scale models and massive word elements, adapting to large-scale high-speed word element inference scenarios. Furthermore, it explores integrated circuit system-level architecture innovation, promotes the large-scale upgrading of computing power clusters, and builds hardware barriers for low-cost mass production of word elements. Finally, it explores data pricing models based on word element transactions, supports the collection and processing of contextual data in professional fields at the enterprise and personal levels, and encourages the mass production of new data products such as expert avatars and service avatars. The notice also stipulates that 100 million yuan in data vouchers will be issued annually, providing purchasing entities with up to 1 million yuan in financial support based on 10% of the annual data transaction amount.Global Chip LOF: Trading in this fund will be suspended from the opening of the market on the afternoon of August 7, 2026 until the close of the market on the same day. During the suspension period, redemption services for this fund will continue as usual.August 7th - Data released by the Democratic Republic of Congos (DRC) Ministry of Health on August 6th showed that the countrys cumulative confirmed cases of Ebola in this outbreak had reached 4,053. The director of the Africa Centres for Disease Control and Prevention (Africa CDC), Kassia, stated that the actual number of infections may be higher than the reported cases. Data released by the DRC Ministry of Health showed that as of August 5th, the country had reported a cumulative total of 4,053 confirmed Ebola cases, including 1,850 deaths and 793 recoveries.On August 7th, the National Energy Administration issued the "15th Five-Year Action Plan for Power Safety Production." The plan emphasizes strengthening safety governance through "artificial intelligence+", innovating high-precision fault prediction and health management methods for equipment, promoting the embedding of artificial intelligence technology into intelligent safety tools, and researching power safety production auxiliary decision-making technologies based on large-scale artificial intelligence models. It also calls for increased independent research and development of key power equipment, enhanced research and development of new protective materials, the establishment of a special plan for tackling key technologies in core components of power equipment, and promoting breakthroughs in key technologies such as power chips and ultra-high voltage (UHV) unit components. Furthermore, it promotes technological innovation in safety and quality control of power construction projects, researches and constructs an intelligent supervision system for power construction projects, and utilizes artificial intelligence, big data, and other means to strengthen off-site supervision and quality control of key power projects.

GBP/USD falls to around 1.2370 as the BoE considers taking swift action ahead of UK inflation and US purchasing managers' indices

Alina Haynes

Apr 17, 2023 13:53

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On Monday morning, the GBP/USD currency pair retested an intraday low of 1.2390 after extending Sunday's decline from a 10-month high. To provoke adverse after breaking a four-week uptrend, the Cable pair explains the most recent concerns emanating from the United Kingdom (UK) and the optimism surrounding the Federal Reserve (Fed).

 

According to the Financial Times (FT), "The Bank of England is considering a major overhaul of its deposit guarantee scheme, including increasing the amount covered for businesses and compelling banks to pre-fund the system to a greater extent to ensure faster access to cash when a lender collapses."  The revelation fuels banking concerns in the United Kingdom and places pressure on the Cable duo.

 

UK Chancellor Jeremy Hunt's concerns about US subsidies may also be exerting downward pressure on the GBP/USD exchange rate as British firms rush to claim benefits before leaving the country. According to the news, "Chancellor Jeremy Hunt warned Sky News that Britain should be wary of any new subsidies, warning that they could undermine the economy and possibly even spark a protectionist trade war."

 

A larger-than-expected decline in US retail sales was unable to offset positive data from US industrial production and the University of Michigan's (UoM) consumer confidence index from the previous day. Despite this, US retail sales decreased by 1.0% in March compared to the predicted -0.4% decline and February's -0.2% decline. As opposed to the 0.2% market consensus and previous reading, Industrial Production increased by 0.4% in the month in question. The preliminary result of the University of Michigan's (UoM) Consumer Confidence Index for April, which increased to 63.5 from 62.0 analysts' expectations and previous readings, was also encouraging. In addition, inflation forecasts for the next year increased from 3.6% in March to 4.6% in April, while inflation forecasts for the next five years decreased by 2.9% during the same month.

 

Notably, Fed officials have recently appeared more hawkish than their BoE counterparts, which has exerted additional pressure on the GBP/USD exchange rate.

 

In this environment, the S&P 500 Futures exhibit modest gains following Wall Street's pessimistic close, while bond yields remain unchanged following weekly increases.

 

Moving forward, the current week is crucial for GBP/USD speculators as it contains a variety of high-quality inflation, employment, and UK PMI data. These data may be used to support the Bank of England's (BoE) officials' waning hawkish inclination and may keep bears in play. However, the US PMIs and Fed discussions should not be disregarded when looking for clear guidelines.

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