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On January 14th, a letter seen by the Financial Times revealed that Federal Reserve Chairman Jerome Powell wrote to several senators last July detailing the Feds $2.5 billion building renovation project, complicating the Trump administrations claims that he misled Congress. The four-page letter was sent two and a half weeks after Powell testified before the Senate Banking Committee on the projects cost overruns. Powell is currently under criminal investigation by the Justice Department for his testimony to the committee. Trump and several senior government officials have accused Powell of misleading Congress regarding the size and scope of the renovation. Jeanne Piro, the U.S. Attorney for the District of Columbia overseeing the criminal investigation, stated that her office issued subpoenas partly to learn more about "the Chairmans testimony before Congress on the project." She said her office had repeatedly requested information but "received no response." However, the letter indicates that Powell provided extensive answers to questions raised by lawmakers.According to the Financial Times: Federal Reserve Chairman Jerome Powell sent senators details of the $2.5 billion Fed program after his testimony.U.S. Senate Majority Leader Thune: A government shutdown is not expected.A source at the Turkish Foreign Ministry said that the Turkish Foreign Minister discussed the latest developments in a phone call with the Iranian Foreign Minister.US President Trump: (When talking about the Federal Reserve) "That bastard" will be out of here soon.

The AUD/USD has dropped from its monthly high at 0.6990 due to poor Australian PMIs and a rebound in the DXY

Alina Haynes

Jul 22, 2022 14:50

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After retesting the monthly high earlier in the day, the AUD/USD continued to slide in Friday's Asian trading. It drops back down to where it started the day, at 0.6916. Recent declines in the Aussie pair may be attributable to the poor prints of Australia's flash readings of S&P Global PMIs for July. The resurgence of the US dollar in the face of pessimistic attitude also affects the pair.

 

S&P Global Manufacturing PMI for Australia dropped to 55.7 in July from 56.2 in June and the 56.4 forecast. Additionally, the S&P Global Services PMI dropped to 50.4 during the mentioned month, which was below the 55.0 consensus and the 52.6 readings seen previously. Moreover, the S&P Global Composite PMI has dropped from 52.6 in prior readings to 50.6 today.

 

Conversely, as risk aversion returns to the market, the US Dollar Index (DXY) is gaining bids and is on track to revisit its intraday high at 106.70, up 0.12% on the day. It's worth remembering that the DXY dropped the day before because it was pegged to US Treasury rates, and that the benchmark 10-year bond coupons had their worst daily loss since mid-June.

 

The yield drop might be the result of a number of factors, including the European Central Bank's (ECB) surprise rate hike of 50 basis points (bps) and the implementation of a new tool known as the Transmission Protection Instrument (TPI) to manage irrational market dynamics in the area.

 

Additionally, the Nord Stream 1 pipeline from Russia restarting its gas exports to Europe boosted market sentiment and aided AUD/USD purchasers the day before.

 

In light of this, Wall Street benchmarks ended the day stronger and the 10-year Treasury rates for the US Treasury had their greatest daily decline in five weeks. However, as of the time of publication, S&P 500 Futures are down 0.50 percent.

 

The ECB's decision to limit the market's confidence as well as long-standing worries about a recession and COVID are the sources of the most recent dip in mood.

 

Nevertheless, the risk-off attitude may affect the AUD/USD pricing going ahead. However, pessimistic predictions for the US PMIs in July give purchasers reason for optimism.


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