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On March 5th, Phillip Nova analyst Priyanka Sachdeva stated in a report that a stronger dollar is likely to continue putting pressure on gold prices. Despite the escalating conflict in the Middle East, the unexpectedly sharp rise in the dollar may have prompted some investors to take profits on gold. As energy prices rise, inflation concerns are resurfacing, while market expectations for fewer rate cuts by the Federal Reserve this year are also strengthening. She added that investors should consider factors such as the dollars performance, the pace of gold purchases by central banks, and whether the conflict in Iran will escalate further when allocating gold.On March 5th, Bei Chen Lin, Head of Investment Strategy for Canada at Russell Investments, stated in a report ahead of Fridays US non-farm payrolls data release that investors should consider the broader context when examining US employment data. "Job growth needs to be considered within the overall environment. With US population growth slowing to near standstill, even adding 60,000 jobs is still a healthy pace of growth." Analysts surveyed by The Wall Street Journal predicted that the US added 50,000 jobs in February, down from 130,000 in January. Lin added, "We believe a robust pace of job growth should be sufficient to stabilize the labor market and may even drive a hiring rebound in the second half of the year."On March 5th, Eastern Time, Bridgewater Associates founder Ray Dalio reiterated his strong bullish stance on gold. He stated that in the competition between gold and Bitcoin, there is a clear winner—gold. He emphasized that golds position is irreplaceable. Dalio recommends that individuals allocate 5% to 15% of their portfolios to gold to diversify risk during times of disaster.Iranian state media reported that explosions occurred in Tehran and Karaj.Hong Kong stocks continued to decline in the afternoon, with the Hang Seng Index turning negative and the Hang Seng Tech Index falling 1.15%. Sports goods stocks declined, with Li Ning (02331.HK) falling 3.6% and Anta Sports (02020.HK) falling 2.5%.

AUD/USD falls approaching 0.7200 despite the former RBA governor's aggressive forecasts

Alina Haynes

Jun 08, 2022 11:59

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Bears and buyers continue to fight for position around 0.7220-25 as sentiment is mixed and investors remain cautious ahead of the week's big data/events. In doing so, the Australian duo struggles to defend the hawkish remarks of former Reserve Bank of Australia (RBA) Governor Ian Macfarlane.

 

Ex-RBA Governor Macfarlane warned early Wednesday morning about chronically rising inflation and the need to drastically increase interest rates. The former policymaker also stated, "There is sufficient scarcity in Australia and the United States to maintain a high inflation rate."

 

In contrast, China's Vice Commerce Minister Wang Shouwen joined China's Vice Finance Minister Zou Jiayi in reiterating concerns about a global economic downturn and a decline in demand. Recent consensus among policymakers held that the rise of global demand is slowing.

 

It's worth noting that a rebound in US Treasury rates and apprehension ahead of Thursday's European Central Bank (ECB) meeting, as well as Friday's US Consumer Price Index (CPI) for May, tend to stifle the AUD/USD pair's movements.

 

In spite of this, 10-year US Treasury note rates jump two basis points (bps) to 2.99 percent the day after breaking a six-day downward trend. A record decline in the US trade deficit and optimism on the US budget appear to have prompted a recall of US Treasury bond sellers. The US trade deficit for April decreased 19.1 percent from the previous day to USD87.1 billion.

 

Other market optimists were defended by US Treasury Secretary Janet Yellen and optimism for a quicker economic rebound in China. Tuesday, US Treasury Secretary Yellen spoke before the Senate Finance Committee about the Fiscal Year 2023 Budget while stating that the US economy faced problems from "unsustainable levels of inflation" and supply chain disruptions. The official said, "An adequate budget is necessary to support the Fed's efforts to control inflation without damaging the labor market."

 

It should be noted that World Bank (WB) President David Malpass's warning that faster-than-anticipated tightening might force certain nations into a debt crisis akin to that of the 1980s appears to have impacted on the quotation as of late. The risk-negative news from Ukraine may follow a similar trajectory. Politico reported that Ukraine has not yet achieved a deal with Russia or Turkey to enable the safe passage of its grain ships in the Black Sea, casting doubt on a U.N. initiative to build a crucial food corridor.

Technical Evaluation

A two-week-old support line protects AUD/USD buyers at 0.7205. However, the 200-day moving average and the recent top, located around 0.7255 and 0.7285, may challenge the Aussie pair's upside before the bulls regain control.


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