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CAFX Market Update 12/08/2022

Welcome to our daily market update where we help keep you informed on the latest happenings in the world of FX and show you what this means for the Mighty Aussie Dollar.
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

United Kingdom        – GDP (YoY) (Q2)
Manufacturing Production (MoM) (Jun)
Trade Balance (Jun)
United States             – Export Price Index (M
oM) (Jul)
Import Price Index (MoM) (Jul)
China                         – New Loans

Macro Report

The US dollar (via the DXY Index) remains moderately weak against other major currencies after tumbling following Wednesday’s Consumer Price Index (CPI) data. The inflation report indicated consumer prices rose 8.5% and 5.9% when it came to Core CPI, both less than initially expected. Additionally, yesterday’s US Producer Price Index data echoed the soft US CPI data, with its surprising downside.

Data, which allured to inflationary price pressures possibly having reached or is near its peak, prompted investors to re-price the probability of a 75-basis point rate hike at the next FOMC meeting in September. With PPI showing a print of -0.5% (MoM) versus a forecasted 0.2% in July, this solidified expectations that the Feds will likely raise rates by 50-basis points over 75-basis points.

The USD tumble has allowed the Aussie dollar to reach above the 71-cent level on US inflation and recent gains in commodity prices, with Brent crude just below the $100USD per barrel level. Although currently just below the 71-cent level, a broad risk-on tone to global macro trade has supported the risk-sensitive Aussie dollar.

Yesterday’s MI Inflation Expectation released for July showed pleasing results, with Australia’s inflation expectations declining to 5.9% from a previous print of 6.3%. A second straight drop has likely weighed on the Aussie dollar.

AUD/USD Daily Chart

DXY (USD INDEX) Daily Chart

Major Global Markets 

Currencies Level Change (%)
AUD/USD 0.7091 -0.21%
AUD/JPY 94.5580  0.04
AUD/CNH 4.7782 -0.16
DXY 105.2040  0.11
Rates Yield (%) Change
US 10 Year 2.88 0.095
Aus 10 year 3.41 0.121
Equities Level Change (%)
S&P 500 4,207.27 -0.07
NASDAQ 12,779.91 -0.58
ASX 200 7,062.60 -0.63
Commodities Level Change (%)
Iron Ore 113.50  1.79
Gold (Comex) 1,804.20 -0.17
Brent Crude oil 99.25 -0.35