AUDUSD: Week Ahead

2022年7月10日

Hello Friends, Investors and Traders !!
Economists are skeptical as to why investors were willing to increase risk amid positive economic developments, because they initially hoped for an economic slowdown that would convince the Fed to ease its aggressive tightening.

The Fed's minutes show members were in favor of "moving to a restrictive stance of policy, and they recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist."

While employment growth is slowing gradually, that slowdown is more driven by supply constraints rather than demand weakness, which creates continued upside for wages.

The Fed governors Christopher Waller and St. Louis Fed President James Bullard backed on Thursday the need for restrictive policy to bring down soaring prices but suggested that the U.S. can still avert a recession.
Waller suggested the Fed would likely attempt to tackle inflation with a 75-basis-point interest rate hike in July and a 50-basis-point hike in September.

Boosting market sentiment, U.S. President Joe Biden will discuss possible U.S. tariffs on Chinese goods in a meeting with advisers later in the day.

U.S. initial jobless claims rose to 235,000 last week, suggesting a cooling demand for labor, as the U.S. Federal Reserve delivers tightening monetary policies.
The dollar fell after Friday's job report, which is noteworthy. If a more robust jobs report pushes the Fed to keep the pressure on rising interest rates to subdue the inflation that will be further boosted by more people working, the dollar should be more substantial. Furthermore, if stocks fall because of the Fed's tightening, the dollar should strengthen as a haven. However, the humans who are doing the trading are also impacting scientific thinking.

June inflation data comes out this week, with most countries releasing data on Wednesday. The U.S. consumer price index is expected to show an 8.8% year over year increase and a 1.1% month over month increase, which would be accelerations from last month’s number. Gas prices and the cost of energy are expected to be the main drivers as the average price of crude oil was 3.6% higher in June than May. Core CPI is expected to be 5.8% year over year, slightly down from May’s number.

The path towards consistent steep rate hikes and quantitative tightening seems fixed for the time being, with last week’s strong jobs report only bolstering the case for tighter monetary policy. The CPI report, which will be quite outdated by the time the Fed meets at the end of the month, may nevertheless make a difference on the margins.

The Reserve Bank of Australia announced on Tuesday an interest rate hike by 50 basis points to 1.35%, in line with expectations. Australia reports June employment data on July 14. Full-time job growth has averaged nearly 61.5k a month this year through May, which is about a third higher than in the same period last year. The unemployment rate is at a record low of 3.9% but may have slipped lower. The market is pricing around a 60% chance of another 50 bp hike when the central bank meets again on August 2. 

A trade surplus of AUD 15.96 billion for the month of May easily outstripped AUD 10.85 billion anticipated. The continuing trade surplus, in the face of spot commodity prices going lower, illustrates the fundamental strength that comes from the long-term contracts of bulk commodities utilised by exporters.

In the week prior, Australia’s second tier economic data releases had been strong and all of them surprised to the upside. Retail sales, job ads and vacancies, private sector credit growth, home loans and building approvals all beat expectations.



This is an article not Financial advice

If you have any questions please leave a comment and I will answer them