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May 6th - Bond traders are increasing their bets that the Federal Reserves next policy move will likely be a rate hike rather than a rate cut. Swap contracts linked to central bank interest rate decisions currently show that the market expects a greater than 50% probability of a Fed rate hike before April next year, prior to any rate cut. More and more traders are also increasing their positions to hedge against the risk of a rising probability of a rate hike before the end of the year. This shift in market conditions comes as policymakers appear increasingly divided on the interest rate outlook. Lawrence Gillum, chief fixed income strategist at LPL Financial, believes that the possibility of a rate cut this year still exists, but this probability will gradually decrease as the conflict with Iran continues. He stated, "Theres no doubt that Warshs path forward will be challenging."Lucid Group (LCID.O) executives: Due to geopolitical conflicts, there were some delays in the delivery of equipment to the Saudi factory, but the team has successfully mitigated the situation.According to the UAEs national news agency, the UAE president received phone calls from several leaders, including Israeli Prime Minister Netanyahu, who condemned Irans attack on the UAE and expressed their support for the measures the UAE has taken to maintain security.AMD (AMD.O) shares rose more than 11% in after-hours trading.ChatGPT has announced its availability as a plugin for Excel and Google Sheets. ChatGPT states that it helps analyze messy data, write formulas, update spreadsheets, and explain the steps involved—all without leaving the spreadsheet interface. The service will be powered by GPT-5.5.

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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