Last week's overview, this week's key events

Source: Dukascopy Bank SA
As it was widely expected none of the major central banks provided any surprises to markets, as all banks kept their monetary policy steady and maintained their benchmark interest rates untouched. While some reiterated their pledge to keep borrowing costs at current level for some time, others like the Bank of England faces increasing debates over rate hikes amid improving economic conditions. As the outcome of central banks decisions was predictable, the corresponding currency showed a muted reaction, being little changed following monetary policy announcements.
Europe continues casting further concerns over its ability to ensure a sustained recovery this year, as even Germany, Eurozone's powerhouse, has been posting weaker than expected fundamentals and moving closer to recession, while Italy has once again entered the downturn. Thus, hopes for a swift rebound in Germany are fading and the country is far too weak to pull southern Europe out of the doldrums. This week will shed some light on the German economy growth, with the nation's preliminary GDP figures are due to be published on Thursday. Meanwhile, the ECB kept the benchmark interest rate at 0.15%, after cutting it from 0.25% in June, and waiting for the recently launched stimulus to spread over the economy. The shared currency weakened versus the U.S. Dollar during the week ended 8 August, falling below the 1.34 mark for the first time since November 2013. A weaker Euro should not only support exporters, but also prove a buffer against deflation; however, the damage already runs deep.
Meanwhile, in another part of the world, Australia saw its jobless rate jumping to the highest level in 12 years, largely due to a rise in a number of people, who are actively looking for work. The worse than expected data lowers expectations of a near-term interest rate lift as the nation's economy shows signs of weakness. The RBA downgraded its growth and inflation outlook on a steeper decline in mining investment and reiterated interest rates will remain on hold. The Aussie Dollar also lost versus its U.S. namesake, providing some relief for the nation's exports and the RBA, which believes the currency is overvalued.
In contrast, Britain's strengthening economy, which grew an annualized 3.2% in the second quarter, means the BoE is on course to be the first of the world's major central banks to lift interest rates from historic lows and debates are heating up among MPC members over the timing of rate lift. The official data on the U.K. economic performance is due to be published, with a particular interest being placed on BoE Inflation report and second estimate of GDP.

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