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September 5th - According to Axios, Republican confidence in the economy has plummeted at an unprecedented rate since the pandemic began over the past six months, a decline comparable to that during the global financial crisis nearly two decades ago. Typically, the ruling party is more optimistic about the economy, while the opposition is far more pessimistic. However, the current situation is unusual; even with Republicans in the White House, Republican voters are increasingly negative about the economy this year. With only two months left until Election Day, this adds another ominous sign for Trump. The director of the University of Michigans consumer survey stated that most of the time, Republican and Democratic confidence in the economy moves roughly in parallel, but this is not the case now. Republicans initially had very positive expectations for the governments economic policies (including tariffs), but they have seen neither a slowdown in inflation, let alone the price reductions promised by Trump.September 5th - The U.S. military stated on the 4th that it has shot down more than 300 drug cartel drones along the U.S.-Mexico border this year. The U.S. Northern Command issued a statement that day saying that the U.S. military has used both kinetic and non-kinetic systems to shoot down more than 300 drones this year to support U.S. Customs and Border Protection, including more than 100 in August. The U.S. military began using the Army Multipurpose High Energy Laser (MLLS) system in border operations on August 24th, and as of September 4th, it had used the system to shoot down 11 drug cartel drones. The U.S. military began using the Army Multipurpose High Energy Laser (MLLS) system in border operations on August 24, and as of September 4, it had used the system to shoot down 11 drug cartel drones.September 5th - Just earlier this year, France completed the domestic consolidation of all its official gold reserves, completely clearing out its custodial holdings in the United States. Eric Monnet, a professor at the Paris School of Economics, stated that this operation not only standardized the quality and specifications of its gold reserves, but also effectively mitigated inflation arising from the Russia-Ukraine conflict, while highlighting considerations for national sovereignty and asset security amidst geopolitical changes. Currently, many countries in Europe, South Asia, Southeast Asia, and the Middle East are reassessing the risks of overseas custody. With rising geopolitical and financial market uncertainty, a new round of adjustments to gold reserve allocations is underway globally.German Chancellor Merz: (Regarding the attempted drone attack at the airport) The attribution is very clear and has a full legal basis.According to Interfax news agency, the Russian Ministry of Defense stated that Russia struck two ships carrying military cargo at the port of Chernomorsk in Ukraine. Russia also attacked a cargo ship near the port of Odessa in Ukraine.

With RBA Minutes and central banks in focus, AUD/USD extends its three-day gain above 0.6700

Daniel Rogers

Sep 20, 2022 14:38

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AUD/USD accepts offers to achieve a fresh intraday high near 0.6735 during Tuesday's Asian session, extending the corrective comeback from the yearly low. In doing so, the Australian pair departs from typical pre-event restraint in the face of a light schedule and a variety of concerns.

 

However, the recently issued Australia weekly Consumer Confidence, as reported by ANZ Roy Morgan, rose 0.4% week-over-week, but failed to excite AUD/USD bulls because markets worry the Reserve Bank of Australia's (RBA) inability to defend aggressive rate moves.

 

Similarly, the recent fall in inflation expectations and the market's anticipation of the RBA's and People's Bank of China's (PBOC) measures had aided AUD/USD buyers in the past.

 

Notable is the fact that US inflation expectations, as measured by the 10-year breakeven inflation rate according to the St. Louis Federal Reserve (FRED) statistics, fell for the third consecutive day to a two-month low of approximately 2.34 percent by the end of Monday's North American trading session. Moreover, according to FRED data, the 5-year breakeven inflation rate plunged to 2.44 percent, its lowest level since September 2021. Concerns were raised regarding the unanticipated market response to the Fed's hawkish wagers. Given the drop in US inflation projections, concerns of a short squeeze in the Aussie-U.S. dollar pair receive considerable attention, allowing the AUD/USD to sustain its momentum.

 

However, US President Biden's willingness to defend Taiwan if China attacks Taiwan and hawkish expectations for the Fed appeared to weigh on the AUD/USD exchange market ahead of significant monetary policy announcements. In response to US Vice President Joe Biden's remarks, China's Foreign Ministry declared on Monday that Beijing "deplores and fiercely opposes this and has lodged strong concerns."

 

In light of these circumstances, the CME's FedWatch algorithm forecasts an 82% chance of a 75-basis-point rate hike at the monetary policy meeting on Wednesday. In addition, the tool says that there is an 18% likelihood that the Fed's rate would raise by one percent. Wall Street ended on a high note, allowing S&P 500 Futures to record slight gains as traders prepare for the opening of the real markets. Additionally, US Treasury interest rates remain positive near the multi-day peak.

 

Prior to the release of secondary US home market data, AUD/USD buyers may be interested in the RBA Minutes and the PBOC's anticipated rate cut. Nonetheless, the Federal Open Market Committee meeting on Wednesday merits the highest attention (FOMC).


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