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
Lower rates provided a boost to US equities, with the S&P 500 gaining 0.5%, rounding off a solid 4% rebound for the week, nearly erasing the prior week’s losses. Meanwhile, the Euro Stoxx 600 index advanced by 0.8% and the FTSE 100 was 04% higher. The yield on the US 10-year Treasury slipped by 2 basis points to 3.65%.
US consumer sentiment measured by the University of Michigan survey, edged up to a four-month high of 69.0, driven by improvements in both current conditions and future outlooks. Year ahead inflation expectations dipped slightly to 2.7%, marking the lowest level since 2020, while the five-year inflation outlook increased by one-tenth to 3.1%.
Following the weekend, China’s August activity data showed weaker-than-expected results across key areas like industrial production, retail sales, and investment. This adds to signs of slowing growth, with GDP likely falling short of the government’s 5% annual target. Prompt additional stimulus might be necessary to reach that goal.
The focus this week is all on the Federal Reserve, with their interest rate announcement due at 6:00 am on Thursday NZT. Markets are debating how to price in the Fed’s decision – will it be a 25 or 50 bps cut? Historically, the Fed has only started with cuts larger than 25bps in three instances, Black Monday, the Dotcom crash, and the Global Financial Crisis.
AUDNZD rised slightly, ending the week just above its high at 1.089. The AUD has been supported by a more hawkish RBA compared to the dovish stance of the RBNZ, along with the effects of lower iron ore prices and higher milk prices. In the long run, interest rate differentials will balance out and AUDNZD will be up to 1.100.
AUDJPY weakened to 94.5 as JPY outperformed, helped by falling US Treasury yields. Meanwhile, USDJPY dropped 0.7% for the day settling at 140.81.
Both AUDGBP and AUDEUR declined by around 0.5%.
Chart of the day
Mid-market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6712 |
| AUD/NZD | 1.0889 |
| AUD/JPY | 94.52 |
| AUD/CNH | 4.7551 |
| AUD/EUR | 0.6054 |
| AUD/GBP | 0.5110 |
| AUD/HKD | 5.2350 |
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.
