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CAFX Market Update 09/11/2022

Welcome to our daily market update, where we help keep you informed on the latest happenings in the world of FX.
If you have any questions or would like anything further explained, please don’t hesitate to reach out to your account manager or email info@cafx.com

Key Data Being Released Today

Japan Adjusted Current Account
Current Account n.s.a. (Sep)
China CPI (MoM) (Oct)
CPI (YoY) (Oct)
PPI (YoY) (Oct)

Macro Report

The Aussie dollar has posted massive gains against a lower US dollar on US midterm election day. The AUD/USD currency pair reached a high of 0.65514 overnight, and is trading at 0.6503 at the time of writing.

Although we have witnessed a rebound, with gains of 2.58% on Friday owed to mixed US Nonfarm Payrolls results, a number of headwinds faced by the Aussie economy will almost inevitably impact the currency’s performance.

Australia’s NAB Business Confidence for October dropped to zero, down from the previous month’s print of 5. Similarly, Westpac’s Consumer Sentiment index plunged by a massive 6.9% to 78 points in November from October. This marks its lowest level since the start of the Covid pandemic in April 2020.

The US dollar weakness comes as the US midterm elections commence, typically being viewed as a referendum on President Joe Biden’s first two years in office. The US Dollar Index (DXY) moved lower for a fourth consecutive day, declining by a significant 0.66% yesterday to close at 109.277. Negative pressures mount as Biden’s popularity dwindles. If the Republicans take control of the House, the Senate, or both, this will result in a gridlock in Washington, placing significant strain on the US dollar. In the absence of a clear historical pattern following midterms, the market’s reaction will largely depend on the outcome of the elections, specifically how it will affect the Fed’s policy trajectory.

AUD/USD Daily Chart

DXY (USD INDEX) Daily Chart

Major Global Markets

Currencies Level Change (%)
AUD/USD 0.6503 -0.06
AUD/JPY 94.7240 -0.07
AUD/CNH 4.7015  0.52
DXY 109.6200 -0.45
Rates Yield (%) Change
US 10 Year 4.13 -2.00
Aus 10 Year 3.94 -2.66
Equities Level Change (%)
S&P 500 3,828.11  0.56
NASDAQ 10,616.20  0.49
ASX 200 6,958.90  0.36
Commodities Level Change (%)
Iron Ore 88.50 -0.56
Gold (Comex) 1,716.10  2.12
Brent Crude oil 95.40 -2.57