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CAFX Market Update 26/08/2022

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

Japan                        – Tokyo Core CPI (YoY) (Aug)
CPI Tokyo Ex Food and Energy (MoM) (Aug)
United States         – Core PCE Price Index (MoM) (Jul)
Goods Trade Balance (Jul)
PCE Price index (YoY) (Jul)
Personal Spending (MoM) (Jul)
Retail Inventories Ex Auto (Jul)

Macro Report

Equities rallied while US bond yields fell as traders anticipate Powell’s Jackson Hole speech for further clarification on the Fed’s policy path to fight inflationary concerns.

US 10-year yields slipped to 3.03%. The S&P 500 climbed 1.41% to 4,199.12, and Dow Jones jumped 0.98% or 322.55 points, to 33,291.78, with gains boosted in the final hour of trading. The Nasdaq Composite also advanced 1.67% or 207.74 points to 12,639.27.

The Aussie dollar is trading at 0.69603 at the time of writing, following the rally during yesterday’s trading session. Although the AUD/USD posted the largest daily jump in a fortnight, the currency pair hit a roadblock at the 0.70 level.

Given the Aussie dollar is highly levered to China, the rally was largely owed to China’s stimulus. Optimism and improved market sentiment led by China’s 19-point policy package and the government declaring economic stimulus measures worth CNY 1 trillion (USD 146 billion) to tackle the country’s growth concerns fuelled by the pandemic and housing market crisis. However, China’s boost to risk assets such as the AUD is likely to fade and may be cut short, given the threat of Jackson Hole.

AUD/USD Daily Chart

DXY (USD INDEX) Daily Chart

Major Global Markets 

Currencies Level Change (%)
AUD/USD 0.6961 -0.29
AUD/JPY 95.1310 -0.17
AUD/CNH 4.7663 -0.26
DXY 108.5320  0.06
Rates Yield (%) Change
US 10 Year 3.03 -0.020
Aus 10 Year 3.67  0.048
Equities Level Change (%)
S&P 500 4,199.12 1.41
NASDAQ 12,639.27 1.67
ASX 200 7,048.13 0.71
Commodities Level Change (%)
Iron Ore 105.55 -4.14
Gold 1,770.80 -0.03
Brent Crude oil 99.34 -1.86