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CAFX Market Update 29/08/2022

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

Australia                   – Retail Sales (MoM) (Jul)
China                         – Chinese Industrial profit (YoY) (Jul)

Macro Report

In the wake of Chair Jerome Powell’s Jackson Hole speech reinforcing the Fed’s hawkish tilt, the Aussie dollar and other major currencies took a tumble. Powell expressed that the Fed would employ forceful action to fight inflation and maintain its current pace of rate hikes.

Following Powell’s remarks which signalled against any indications of loosening monetary policy, Treasury yields lowered, and gold erased its gains for the week. The US Dollar Index (DXY) rallied as a result; at the time of writing, the dollar index is up 0.33% and is trading at the 109.16 level.

Today’s retail sales for Australia are forecasted to show a 0.3% month-over-month increase in July, versus a prior month print of 0.2%. Release of this data could potentially offer a shift in sentiment and act favourably for the Aussie dollar.

Looking ahead this week, market participants are anticipating the US non-farm payrolls report for August. If employment figures project a strong labour market, this may reinforce the Fed’s tightening bets. Elsewhere, China’s manufacturing PMI is due on Wednesday and is expected to indicate ongoing economic contraction. Meanwhile, in the Eurozone, inflation data will be closely watched. With ECB’s CPI target at 2% and data expected to show annual inflation accelerate to 9.0%, this will likely pressure officials and make a case for a larger rate hike in the following month.

AUD/USD Daily Chart

DXY (USD INDEX) Daily Chart

Major Global Markets 

Currencies Level Change (%)
AUD/USD 0.6865 -0.46
AUD/JPY 94.8350 -0.05
AUD/CNH 4.7374 -0.26
DXY 109.1600  0.33
Rates Yield (%) Change
US 10 Year 3.04  0.005
Aus 10 Year 3.59 -0.088
Equities Level Change (%)
S&P 500 4,057.66 -3.37
NASDAQ 12,141.71 -3.94
ASX 200 7,104.06  0.79
Commodities Level Change (%)
Iron Ore 108.50  1.88
Gold 1747.90 -0.11
Brent Crude oil 100.57 -0.42