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CAFX Market Update 13/1/2023

Welcome to our daily market update, where we help keep you informed on the latest happenings in the world of FX.
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Australia                   – Home Loans (MoM)
China  – Exports (YoY) (Dec)    
    Imports (YoY) (Dec)    
    Trade Balance (USD) (Dec)    
United Kingdom  – GDP      
    Industrial Production (MoM) (Nov)    
    Manufacturing Production (MoM) (Nov)  
    Trade Balance (Nov)    
    Trade Balance Non-EU (Nov)    
Eurozone Industrial Production (MoM) (Nov)    
    Trade Balance (Nov)    


Industrial Production (MoM) (Nov)Trade Balance (Nov)The Aussie Dollar gained significant ground overnight against the US Dollar as it aimed to test the 0.70 handle. The AUD/USD pair hit a high of 0.6985 aided by a reversal of China’s shadow ban on Australian resources and upbeat domestic data. Although, most momentum was gained following US inflation data reporting its lowest in more than a year.

The US Bureau of Labor Statistics reported US Headline CPI easing from multi-decade highs to rise at an annual pace of 6.5% in December versus a prior reading of 7.1%. On a monthly basis, CPI fell by 0.1% following November’s increase of 0.1%. As expected, the core rate, which excludes volatile food and energy prices, eased to 5.7% on a yearly basis from the previous month’s print of 6.0%, and finally, Core CPI (MoM) rose by 0.3%. With US price pressures finally on the decline, data is supportive of a slower pace of rate hikes for the Fed, something the markets have been anticipating since the last quarter of 2022.

As a knee-jerk reaction, the US dollar rose slightly but failed to gain momentum. The US Dollar Index (DXY) is down -0.90%, trading at 102.2570 at the latest. As of writing, the AUD/USD pair is trading 0.6962, up 0.78%. On US CPI news, Wall Street seesawed until finally turning to the upside, with the S&P 500, NASDAQ and Dow Jones rising 0.34%, 0.64% and 0.64%, respectively.

It is also worth noting that Australia’s balance came in better than expectations at a surplus of AUD 13.201 billion, an upward revision from a prior reading of AUD 12.217 billion.

Next of relevance, China will release its trade balance data, followed by UK GDP for November.