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On October 25th, local time, Sudans Rapid Support Forces (RSF) announced their control of Bara, a major city in North Kordofan State, central Sudan. The statement stated that the RSF launched a full-scale offensive against the Sudanese Armed Forces (SAF)-held city, inflicting thousands of casualties and injuring hundreds, ultimately securing full control of the city. The statement also stated that retaking Bara is a significant step toward full control of the Kordofan region. The SAF has yet to respond to the statement.Pakistans Defense Minister: We see Afghanistans desire for peace, but failure to reach an agreement will mean open war.On October 25th, local time, the second round of ceasefire talks between Pakistan and Afghanistan began in Istanbul, Turkey. The talks were hosted by Turkey and held at an Istanbul hotel. The Pakistani delegation included the militarys director of operations and security and intelligence officials. The Afghan delegation was led by Deputy Interior Minister Rahmatullah Najeeb.On October 25th, Belgorod Oblast Governor Ilya Gladkov announced that Ukrainian armed forces had damaged the Belgorod Reservoir Dam. He stated that Ukrainian forces might attempt to attack and destroy the dam again. If this were to happen, several streets in riverbanks and settlements near Kharkiv Oblast would be flooded, impacting the lives of approximately 1,000 residents. Gladkov stated that local authorities have advised residents at risk of flooding to move to temporary relocation sites. The Ukrainian side has not yet responded to this request.On October 25th, Bank of France Governor François Villeroy de Villeroy warned lawmakers debating the 2026 budget that the deficit must not exceed 4.8% of economic output to ensure France can cope with its growing debt burden. The French National Assembly is currently debating a draft budget that targets 4.7% GDP growth, but Prime Minister Jean-Claude Le Cornu has said the ultimate target should be within 5%, and he is seeking a compromise with opposition lawmakers. "It is absolutely necessary to keep the deficit below 3% between now and 2029, which would imply a maximum deficit of 4.8% next year," Villeroy de Villeroy said in an interview with La Croix. He also stated that France faces the risk of "progressive suffocation" from debt and that additional deficit spending will fail to stimulate economic growth. According to calculations by the Bank of France, if debt uncertainty is reduced, a 1% reduction in the household savings rate would boost economic growth by 0.4%. However, Villeroy de Villeroy stated that the French economy has strong momentum this year and growth will be "at least" as strong as the Banks forecast of 0.7%.

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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