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
Global equities were mostly lower, with the S&P 500 down 0.4%. The Euro Stoxx 50 and FTSE 100 ended the day down 1.3% and 0.3%, respectively. The US yield curve briefly reverted to a positive 2-year to 10-year spread, but it has since flattened again, and the yield on the US 10-year Treasury fell by 5 bps to 3.76%.
Expectations for a Fed rate cut grew as US data showed a continued slowdown in the labor market. The JOLTS report showed job openings in July fell to 7.67 million, the lowest since early 2021, down from a revised 7.91 million in June and below expectations. Layoffs increased, reflecting weaker demand for workers. The ratio of job vacancies to unemployed workers, a key Fed metric, dropped to 1.1, the lowest in three years, down from its 2022 peak of 2 to 1. The quits rate, which tracks voluntary job departures, slightly increased to 2.1%, still close to the lowest levels since 2020, indicating reduced confidence in finding new jobs.
Out of Canada, The Bank of Canada reduced interest rates by 0.25% for the third consecutive meeting and emphasized that further easing is likely if inflation continues to slow. The CAD (Loonie) gained strength against the USD, but it didn’t leave any lasting effect to the CAD and is consistent with the movement of other G10 currencies.
AUDNZD moved back 1.08 after the Australian GDP data. However, the pair has yet to clearly break through the mid-point of the February-July decline and the 200-day moving average, both around 1.084-1.085. A move above this level and the 29th August high near 1.080 would signal a strong bullish trend for the pair.
NZDJPY has dropped to 89.20, with the yen leading gains over the past day as the US dollar weakened.
Day Ahead
U.S. ISM Services Index rose above the expectations in July, reflecting firming business activity. The market expects August data to fall back slightly but remain above the critical 50 level, and the employment component could influence the expectations for the employment report later in the week.AUD/USD traded in a .6685/.6749 range overnight. Demand is expected at .6660, while offering interest remains ahead of .6800.
Mid-market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6720 |
| AUD/NZD | 1.0847 |
| AUD/JPY | 96.55 |
| AUD/CNH | 4.7761 |
| AUD/EUR | 0.6064 |
| AUD/GBP | 0.5112 |
Disclaimer:
The market update provided by Corporate Alliance FX (CAFX) is for reference only and does not constitute a bid, levy, offer or invitation to offer for the financial product, the basis for any contract or commitment, a recommendation for the purchase or sale of any investment instruments, financial, legal, tax, investment advice, investment advice or other opinions. It will not be legally liable for any consequences or losses caused by the information or content involved.
Corporate Alliance Group Pty Ltd T/A Corporate Alliance FX (CAFX) (ABN 58 167 119 226, AFSL 523351) (i.e. CAFX), CAFX independently holds the Australian Financial Services licence no. 523351 (AFSL), so CAFX is regulated by the Australian Securities and Investment Commission (ASIC) and, and although ASIC is a strictly regulatory body, it does not endorse a specific financial product. ASIC’s regulation of CAFX applies to all services under the financial licence held by CAFX, including the issuance of foreign exchange settlement, foreign exchange payments, foreign exchange risk control, hedging, market making and providing financial advice.
