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On July 13th, Citigroup strategists stated that the UK stock markets strong defensive nature and heavy commodity weighting are diminishing its appeal as geopolitical tensions ease. A team led by Beata Manthey downgraded the UKs rating in their global asset allocation from "overweight" to "underweight," favoring investments in the US and Japanese markets. The team maintained a "neutral" rating for European markets excluding the UK. The team stated, "The UK markets strong defensive nature and high commodity weighting have diminished its appeal in an environment of earnings growth and market leadership diffusion." Benefiting from its approximately 10% energy stock weighting, the UK benchmark FTSE 100 index performed exceptionally well until mid-April, with energy stocks such as BP and Shell benefiting from the oil price surge caused by the Iran conflict. Meanwhile, the indexs nearly 35% allocation to defensive sectors such as healthcare and consumer staples made it a relatively safe haven during periods of geopolitical tension or economic recession. However, since the US-Iran ceasefire was announced on April 8th, the FTSE 100 has significantly underperformed.The commander of the Ukrainian drone force stated that Ukrainian drones struck 15 Russian vessels in the Sea of Azov, including seven oil tankers.Market news: WeRide (WRD.O) is accelerating the global expansion of its end-to-end intelligent driving solutions.The New Taiwan dollar fell to 32.226 against the US dollar, a new low since the end of April 2025.July 13th - Morgan Asset Management predicts that central banks will likely maintain a slightly hawkish stance, but will be more restrained in raising interest rates. They now believe the Federal Reserve will keep interest rates unchanged throughout 2026, with one rate cut in the second half of 2027; the UK and Europe will maintain their current stance for the remainder of this year. As for the Bank of Japan, they expect it to continue its gradual normalization, with one rate hike each in the second half of 2026 and 2027.

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

Alina Haynes

Jun 08, 2022 11:59

 截屏2022-06-08 下午12.00.41.png

 

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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