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CAFX Market Update 28/09/2022

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

Australia                   – Retail Sales (MoM) (Aug)
United States         – Goods Trade Balance (Aug)
Retail Inventories Ex Auto (Aug)

Macro Report

Having come under pressure last week, the Aussie dollar and other commodity-linked currencies have extended their downward trajectory on negative market sentiment. The AUD/USD currency pair tumbled below the June 2020 low (0.6648) and currently oscillates around the 0.6440 level at the latest.

The AUD pullback comes ahead of the highly anticipated speech by Fed Chair Powell, where he will etch out the tightening roadmap for the remainder of the year. Powell’s guidance on interest rates is expected to remain very hawkish with the primary objective of bringing inflation down to the Fed’s 2% target.

Further strengthening the US dollar index (DXY) is the Durable Goods Order data, which showed a lower-than-expected decline of 0.2% in August, compared to the forecasted contraction of 0.4% and the previous month’s decrease of 0.1%.

Meanwhile, the cut in growth projections for China by the World Bank and UK’s plan to implement tax cuts has raised economic uncertainty and left investors preparing for a deeper and longer-term global economic downturn. As the market appetite for risk deteriorates, demand for haven assets and the US dollar are boosted, hammering the Aussie dollar toward the 0.6400 level.

Amid the current environment, the release of Aussie Retail Sales data will likely do little to alter the AUD/USD currency pair, as household spending in August predicted to slow down to 0.4% following a 1.3% expansion in the prior month.

AUD/USD Daily Chart

DXY (USD INDEX) Daily Chart

Major Global Markets 

Currencies Level Change (%)
AUD/USD 0.6428 -0.11
AUD/JPY 93.0660 -0.13
AUD/CNH 4.6096 -0.05
DXY 114.1060  0.01
Rates Yield (%) Change
US 10 Year 3.95  0.35
Aus 10 Year 4.02  0.24
Equities Level Change (%)
S&P 500 3,647.29 -0.21
NASDAQ 10,829.50  0.25
ASX 200 6,496.20  0.41
Commodities Level Change (%)
Iron Ore 99.01 -10.08
Gold 1,636.70  0.03
Brent Crude oil 86.27  2.63