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CAFX Market Update 14/09/2022

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

Japan                        – Industrial Production (MoM) (Jul)
United Kingdom     – CPI (YoY) (Aug)
CPI (MoM) (Aug)
PPI Input (MoM) (Aug)
Eurozone                – Industrial Production (MoM) (Jul)
United States         – Core PPI (MoM) (Aug)
PPI (MoM) (Aug)
United States         – Core CPI (MoM) (Aug)
Core CPI (YoY) (Aug)
CPI (MoM) (Aug)
CPI (YoY) (Aug)

Macro Report

The US dollar has surged to new highs against its peers, the Euro, Pound and Aussie dollar, on the back of last night’s CPI data. The US Dollar Index (DXY) climbed 1.4850 points overnight, closing at 109.8150. The EUR/USD has plummeted through parity from yesterday’s high of 1.0187. The AUD/USD currency pair has fallen to 0.6737 at the latest, dropping more than 2% from yesterday’s high of 0.69163.

The rapid boost in US dollar momentum comes after the stronger-than-expected rise in US consumer prices in August. The Labour Department reported a print of 8.3%. While lower than the previous month’s print of 8.5%, CPI was unexpectedly higher than the predicted 8.1% figure.

The US 10-year Treasury note yield jumped to 3.41%, while the yield on the 2-year Treasury note rocketed to 3.76% on surprising upside CPI.

Meanwhile, equities plunged, with the S&P 500 down more than 4%, the Nasdaq Composite showing a 5.26% decline, and Dow Jones nearing a 4% fall.

Further boosting the US dollar strength is increased investor bets for an aggressive Fed, with expectations of a 100bps hike at next week’s FOMC meeting starting to build. However, market consensus leans towards a third-straight 75 bps rate hike, lifting the Fed’s current policy rate from a range of 2.25%-2.5% to 3%-3.25%.

Today’s economic docket features US Producer Price Index (PPI) for August, reflecting inflation at the producer level. Data may keep the AUD/USD entrenched in a bear trend as it tumbles towards multi-year lows.

AUD/USD Daily Chart

DXY (USD INDEX) Daily Chart

Major Global Markets 

Currencies Level Change (%)
AUD/USD 0.6737  0.10
AUD/JPY 97.3140  0.01
AUD/CNH 4.6988  0.01
DXY 109.8150  1.37
Rates Yield (%) Change
US 10 Year 3.41 0.094
Aus 10 Year 3.67 0.107
Equities Level Change (%)
S&P 500 3,932.69 -4.32
NASDAQ 11,633.57 -5.16
ASX 200 7,009.70  0.65
Commodities Level Change (%)
Iron Ore 101.41 -7.90
Gold 1,712.00 -0.31
Brent Crude oil 93.17 -0.88