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
Stocks rallied globally, with the strongest gains in the US, driven by a favourable PPI report and a positive NFIB survey. The S&P 500 rose 1.6%, the Euro Stoxx 50 increased by 0.5%, and the FTSE 100 climbed 0.3%. Meanwhile, the yield on the US 10-year note dropped by 6 bps to 3.85%.
This week, the market’s focus on US economic releases was primarily on the two key inflation reports, the PPI and CPI. The release of a mild PPI report overnight set the stage for the Fed to potentially start its easing cycle next month. The July Producer Price Index (PPI) for the US increased by 0.1% month-over-month, with the core measure remaining flat at 0.0%. The drop in core inflation was mainly due to a 1.3% decrease in trade service prices, which reversed the 1.4% rise seen in June. On an annual basis, headline PPI inflation rose by 2.2%, down from 2.7% in June, and core inflation eased to 2.4% from 3.0% the previous month. The CPI release tonight will be closely watched to further support the case for a rate cut.
In other economic news, the NFIB’s small business optimism index reached a 2.5-year high of 93.7, although this was mainly driven by a component measuring general business conditions, with most other components showing little to no change.
The weak data led to lower US interest rates, a drop in the USD, and a rise in US stocks.
Today’s main focus locally is the RBNZ Cash Rate Statement at 2:00 pm.
Globally, attention turns to the US, with July CPI report tonight and the July Retail Sales data on Thursday night, both of which are significant. While CPI is the primary focus, retail sales are also important due to recent drops in average weekly hours from the latest NFP. This could indicate downside risks for retail sales, and any surprises could impact the market, especially given concerns about US economic activity. If either figure deviates significantly from expectations, it could lead to market volatility, though likely not as extreme as last Monday’s events.
Mid market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6638 |
| AUD/NZD | 1.0914 |
| AUD/JPY | 97.63 |
| AUD/CNY | 4.7470 |
| AUD/EUR | 0.6035 |
| AUD/GBP | 0.5158 |
AUD/USD 24 Hour
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.
