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CAFX Market Update 26/10/2022

Welcome to our daily market update, where we help keep you informed on the latest happenings in the world of FX.
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

Australia ANZ Business Confidence (Oct)
CPI (QoQ) (Q3)
Trimmed Mean CPI (QoQ) (Q3)
United States Goods Trade Balance (Sep)
Retail Inventories Ex Auto (Sep)

Macro Report

The Aussie dollar has found support from a sinking US dollar amid cautious market optimism and pre-FOMC meeting silence. The US dollar (via the DXY index) remains vulnerable around the 110.00 threshold, displaying weakness as it struggles to reclaim its 112.00 figure from the week-start.

The US house price and consumer confidence data falling below expectations indicate signs of economic deterioration. Disappointing data has resurfaced concerns about the risks associated with the Fed’s aggressive tightening path, with hopes of monetary policy easing in the coming months.

The AUD/USD pair currently lies below the 0.6400 level at 0.6380, following a near 100-pip rally overnight.

Scheduled for release today is Aussie Consumer Price Index (CPI) data, where headline inflation rate is forecasted to show a 7% rise in Q3, compared to the prior figure of 6.1% on an annual basis. If accurate, this would mark the highest figure since 1990. While the quarterly CPI read is expected to soften to 1.6% versus a previous 1.8%, Trimmed Mean CPI (Q3) is forecasted at 5.6% (YoY) versus 4.9% in the last quarter, well above the RBA’s target range of 2 to 3%. If prices come in hotter than expected, an upside surprise may fuel an Aussie dollar rally as it could prompt the RBA to pivot its monetary policy stance.

AUD/USD Daily Chart

DXY (USD INDEX) Daily Chart

Major Global Markets 

Currencies Level Change (%)
AUD/USD 0.6380 -0.22
AUD/JPY 94.4820 -0.12
AUD/CNH 4.6620  0.95
DXY 110.9500 -0.93
Rates Yield (%) Change
US 10 Year 4.10 -3.12
Aus 10 Year 3.94 -3.44
Equities Level Change (%)
S&P 500 3,859.11  1.63
NASDAQ 11,199.12  2.25
ASX 200 6,798.60  0.28
Commodities Level Change (%)
Iron Ore 95.50  1.06
Gold 1,658.00  0.24
Brent Crude oil  93.19 -0.08