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The yield on the two-year U.S. Treasury note fell to a six-month low of 3.6550% and was last at 3.6611%.On April 4, local time on April 3, U.S. Secretary of Health and Human Services Robert Kennedy Jr. said that about 20% of the layoffs in the Department of Government Efficiency were wrong and needed to be corrected. The U.S. Department of Health and Human Services laid off about 10,000 people on the 1st. Kennedy said that people who should not have been laid off were laid off, and the department is restoring their positions. Kennedy said that canceling the entire lead poisoning prevention and monitoring department of the Centers for Disease Control and Prevention was one of the mistakes. At present, it is unclear what other projects Kennedy may plan to restore.Bank of Japan Governor Kazuo Ueda: Will consider the impact of food costs on consumers.On April 4, local time on the 3rd, the automobile company Stellantis said that due to the impact of the US import automobile tariff policy, the company decided to lay off 900 employees in its five US factories and suspend production operations at two assembly plants in Canada and Mexico. Antonio Filosa, Chief Operating Officer of Stellantis Americas, said that the US factories that were laid off were powertrain and stamping parts factories, which produced spare parts for two assembly plants in Canada and Mexico. According to the plan, the assembly plant in Canada will stop production for two weeks, and the assembly plant in Toluca, Mexico will suspend production throughout April. Filosa said the company is "continuing to evaluate the medium- and long-term impact of tariffs on operations."Bank of Japan Governor Kazuo Ueda: Non-weather factors may push up food prices.

Above 0.68, AUD/USD justifies cautious optimism due to the RBA rate hike and US ISM PMI

Alina Haynes

Sep 06, 2022 15:32

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AUD/USD flourishes on the bull's radar as it retests the intraday low around 0.6820, near 0.6815 at press time, during Tuesday's Asian session with a modestly positive market outlook. The recent appreciation of the Australian dollar could be attributed to hawkish expectations for the Reserve Bank of Australia's (RBA) anticipated fourth rate hike.

 

Whether it's the United Kingdom's energy bill freeze or the People's Bank of China's (PBOC) reduction in the Reserve Requirement Ratio (RRR), not to mention stimulus from Germany/Europe, officials are all engaged in the fight against the recession, which boosted sentiment. The market's reaction to the recent pullback in hawkish Fed bets, notably after Friday's mixed US employment report, is also likely to have benefited AUD/USD purchasers. Reserve Bank of Australia (RBA) rate hike preparations and full markets looked to have taken precedence in recent months.

 

US 10-year Treasury rates increased three basis points to 3.22%, while S&P 500 Futures advanced 0.30 percentage points to 3,933 at the latest.

 

Alternately, the impending Eurozone recession, the probability of higher rate hikes by the US Federal Reserve (Fed) despite recent mixed data, and Sino-American conflicts are weighing on the prices. Notably, the RBA rate hike appears to be well priced in; hence, AUD/USD traders appear to be anticipating a bearish move.

 

Russia's suspension of energy supplies to Europe worsened the situation for the old continent when it joined the other Group of Seven (G7) nations in establishing an oil price cap. Diminished hopes for a US-Iran oil deal and the output decrease by the Organization of the Petroleum Exporting Countries and its allies, especially Russia, added further to the European energy crisis.

 

In addition, the US-China disagreement over the trade agreement and Taiwan deteriorated on Monday when the Biden administration announced its intention to keep the tariffs imposed by the Trump administration for the foreseeable future. Previously, the elimination of these levies suggested that relations would likely improve. In addition, the United States' willingness to sell arms to Taiwan and Taipei's policy of giving visa-free entry to nationals of some friendly countries, including the United States, prompted Beijing to express negative sentiments about US-Taiwan relations and exacerbated tensions.

 

In the future, the RBA's 0.50 percentage point rate boost would not be sufficient to satisfy AUD/USD bulls unless the rate statement appears hawkish. Notwithstanding, a smaller-than-anticipated rate hike or dovish comments from the Australian central bank could prolong the pair's downward trajectory. After that, the ISM Services PMI for August, which is predicted to be 55.5 compared to 56.7 earlier, will be closely observed for further momentum.


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