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The Hang Seng Index rose in the short term, and the Hang Seng Tech Index narrowed its losses to 0.5%.According to Investopedia, a financial website, forecasters predict that U.S. inflation may have risen to a 17-month high in September as tariffs push up prices. A Wall Street Journal survey of economists indicates that the CPI report, due this Friday, is likely to show a 3.1% annual increase in overall prices in December. Rising inflation would highlight the impact of Trumps tariffs, which have risen almost every month since the tariffs were announced in April. Despite rising prices, lower rent increases may prevent overall inflation from rising too much. Core inflation is expected to rise 3.1% in September, unchanged from August. Overall, the increase in inflation may not be large enough to prevent the Federal Reserve from cutting interest rates in late October. Having already cut rates by 25 basis points in September to support the sluggish job market, the Fed is now more focused on the job market than on combating inflation. Wells Fargo economists Sarah House and Nicole Cervi said, "We expect goods inflation to remain elevated due to the continued pass-through of tariffs, while easing primary housing costs should help mitigate services inflation."On October 23rd, Goldman Sachs economists said in a report that the Bank of Japan is likely to keep its policy rate unchanged next week from a risk management perspective amid high uncertainty. They said: "After assessing that uncertainty in its baseline outlook is high, the Bank of Japan is likely to judge that while downside risks to the economic outlook are substantial, upside risks to the price outlook are also substantial." They pointed out that the Bank of Japan is likely to maintain its stance of gradual rate hikes.The South Korean won fell to its lowest level against the dollar since mid-May.Indian state refiners are reviewing bills of lading for Russian oil cargoes arriving after Nov. 21 to ensure there are no direct supplies from Rosneft and Lukoil, which are subject to U.S. sanctions, sources said.

AUDUSD soars above 0.6660 prior to PBOC monetary policy announcement

Daniel Rogers

Nov 21, 2022 11:48

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The AUDUSD pair has climbed after finding support near 0.6660 during the early Asian session. Earlier, the asset saw declines as investors panicked over the People's Bank of China's interest rate decision (PBOC).

 

Lacking potential catalysts for significant action, the market's risk appetite remains muted. As investors anticipate the release of US Durable Goods Orders data, the dollar index (DXY) is encountering brief resistance near 107.00.

 

Raphael Bostic, president of the Atlanta Federal Reserve (Fed), anticipates that the 75 basis point (bps) rate hike regime will terminate in the near future, which might have a negative influence on the returns on US government bonds.

 

A Fed policymaker told Reuters on Saturday that he is prepared to "walk away" from three-quarter-point rate hikes at the December meeting of the Fed. To battle inflation, he claimed that the Fed's target policy rate will not climb by more than one percentage point. After then, the Fed would need to pause and "let the economic dynamics to play out," as it may take between 12 and 24 months for the impact of rate hikes to be "fully appreciated."

 

Monday's monetary policy announcement by the PBOC will be widely monitored. As economic forecasts have decreased due to the development of the Covid-19 virus, the Chinese central bank may adopt an expansionary stance. Moreover, sluggish real estate demand would require the injection of new cash into the economy. Notably, Australia is China's largest trading partner, and a decision by the PBOC to lower interest rates would benefit Australian bulls.

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