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CAFX Market Update 25/07/2022

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 States         – Chicago Fed National Activity (Jun)

Macro Report

We saw global market sentiment improve last week. S&P 500 and Nasdaq 100 gained 2.54% and 3.49%, respectively. In Australia, the ASX 200 increased by 1.95%. This improvement in risk appetite meant the safe-haven US dollar took a hit, with the DXY Dollar Index down 1.31% last week.

Commodity-wise, crude oil struggled, primarily due to diminishing global growth expectations. Gold remained volatile but managed a slight recovery last week, likely benefiting from the weaker US dollar and falling Treasury yields.

The Aussie dollar has pulled back slightly after ending last week on a relatively positive note, despite a drop in Australian manufacturing and services PMI for July to 55.7 and 50.4, respectively. Though, it was likely that the US PMI buoyed the Aussie dollar to monthly highs.

If risk appetite holds up, the Aussie dollar could see more gains this week. However, considering the current economic recession narrative and the Aussie dollar being a proxy for risk in currency land, this favours bearish trends for the Aussie dollar in the coming months. Not to mention the growing interest rate advantage of the USD over AUD in today’s stubbornly high inflationary environment.

Looking ahead, Australia will be releasing its second quarter Consumer Price Index (CPI). Inflation figures are expected to show a rise in consumer prices, indicating an annual inflation print of 6.3%, versus a prior print of 5.1%. This will provide the backdrop for RBA’s next meeting on August 2nd, as the board makes its monetary policy decision. Its also worth noting that ANZ is predicting the RBA will deliver four consecutive 50-bps rate hikes in the coming months, bringing the cash rate to 3.35% by November.

AUD/USD Daily Chart

DXY (USD INDEX) Daily Chart

Major Global Markets 

Currencies Level Change (%)
AUD/USD 0.6910 -0.27
AUD/JPY 94.2390 -0.02
AUD/CNH 4.6676 -0.19
DXY 106.5590 -0.16
Rates Yield (%) Change
US 10 Year 2.75 -0.027
Aus 10 year 3.43  0.015
Equities Level Change (%)
S&P 500 3961.63 -0.93
NASDAQ 11834.11 -1.87
ASX 200 6791.50 -0.04
Commodities Level Change (%)
Iron Ore 105.39  2.49
Gold 1742.40 -0.17
Brent Crude oil 103.97  0.75