EUR/USD 1.14549
0.026%
Gold 4751.33
-1.391%
Oil 96.234
-2.658%
USD/JPY 159.422
-0.271%
GBP/USD 1.32629
0.049%
GBP/JPY 211.444
-0.161%
Browse More
  • English
  • 简体中文
  • 繁體中文
  • Tiếng Việt
  • ไทย
  • Indonesia
Subscribe
Real-time News
March 19 – On the afternoon of March 19, the Ministry of Commerce held a regular press conference. A reporter asked how China would participate in the 14th Ministerial Conference of the World Trade Organization (WTO), which will be held at the end of this month. In response, Ministry of Commerce spokesperson He Yongqian stated that the 14th WTO Ministerial Conference (MC14) will be held in Yaoundé, the capital of Cameroon, from March 26 to 29, and Minister of Commerce Wang Wentao will lead the Chinese delegation to attend.On March 19th, it was reported that on March 17th, Zhu Hexin, Secretary of the Party Leadership Group and Director of the State Administration of Foreign Exchange (SAFE), chaired an enlarged meeting of the Party Leadership Group. The meeting focused on deepening reform and innovation in the foreign exchange sector. It emphasized improving the facilitation of cross-border trade and actively supporting the stability and structural optimization of foreign trade. The meeting stressed strengthening the supply of foreign exchange policies, focusing on key areas such as technological innovation and intelligent manufacturing, and continuing to focus on the "five major aspects" of financial development. It also emphasized strengthening the assessment of foreign exchange policies and regional foreign exchange ecosystems, conducting timely effectiveness assessments of important foreign exchange policies and key tasks, and striving to achieve closed-loop management throughout the entire process from policy issuance to the "last mile" of impact on enterprises and residents, truly benefiting businesses and the people.Singapores fuel oil inventory for the week ending March 18 will be released in ten minutes.Morgan Stanley has postponed its expectations for a Federal Reserve rate cut to September and December, up from its previous expectations of June and September.UK interest rate futures indicate that the market is pricing in a 32-basis-point tightening of interest rates by the Bank of England by December 2026, compared to 21 basis points the previous day.

Outlook for the Australian Dollar: RBA Action Does Little to Boost AUD

Alina Haynes

May 09, 2022 10:27

Following rate decisions from the RBA and the Federal Reserve, the Australian Dollar oscillated erratically over the course of the week. Wednesday and Thursday saw daily AUD/USD movements of more than 2 percent in opposing directions.

 

The clear message for the Australian Dollar is that it remains susceptible to fluctuations in the US Dollar.

 

The core underpinnings of the Australian economy remain robust. Public and private debt levels are quite manageable. This week's announcement of the trade balance (+9.3 billion AUD) underlined the strength of exports. The unemployment rate is at an all-time low of 4 percent, and economic growth is robust.

 

As the US Dollar adjusts to a Federal Reserve that is finally tightening monetary policy at breakneck pace to rein in skyrocketing inflation, none of this matters for the AUD/USD.

 

While the Reserve Bank of Australia (RBA) raised rates by 25 basis points (bp) on Tuesday, as anticipated in this column over a month ago, the Federal Reserve raised the stakes by 50 bp on Wednesday.

 

Fed Chair Jerome Powell effectively ruled out futures price increases of 75 basis points, causing the USD to weaken as the market had anticipated such increases.

 

The Dollar reversed course the following day after former Vice Chair Richard Clarida appeared to return to the super hawk position by stating, "Getting to neutral quickly will not be sufficient." AUD/USD was swept up in the turmoil.

 

The USD/CNY was permitted to fall to its lowest level since November 2020 prior to the weekend, which could have implications for the broader currency markets. If the currency of the second-largest economy in the world continues to erode against the US dollar, the dollar's strength may become even more widespread.

 

Consequently, the AUD/USD pair is in a vulnerable position as it trades near 18-month lows. The upcoming week will be dominated by Fed speakers. Any increase in hawkish rhetoric could lead to another jump in US Dollar strength, exposing AUD to losses.

 

The graph below illustrates the sensitivity of the Australian dollar to changes in the US dollar.

Index AUD/USD against US Dollar (DXY)

image.png 


Suggestion