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On April 3, White House aide Peter Navarro said that US President Trump’s tariffs could increase revenue by three times the size of the World War II tax increase in 1942, and could become the largest tax increase in US history.On April 3, a research report by CLSA indicated that ChinaSoft International (00354.HK)s revenue fell 1% year-on-year to RMB 16.951 billion last year, and the first disclosed AI-related revenue was RMB 957 million, accounting for 5.6% of revenue. The companys price reduction strategy has led to a decline in gross profit margin, and the main reason for the lower-than-expected net profit is a one-time impact. The bank expects the companys fundamentals to improve this year, mainly because the number of employees increased in the second half of last year. The bank expects the companys net profit to reach RMB 748 million this year, up 45.8% year-on-year, and lowered the target price from HK$7 to HK$6.5, maintaining the rating of outperforming the market.On April 3, the Australian bond market has experienced a dovish turn since the White House announced its new tariff agenda. IG market analyst Tony Sycamore said that the market has priced in an 85% chance that the Reserve Bank of Australia will cut interest rates by 25 basis points in May. Subsequent rate cuts are expected in August and November, with a cumulative rate cut of 75 basis points by November. He added that US tariffs have far exceeded expectations, increasing the likelihood of a trade war and recession in the United States. He also said that since goods from countries such as Vietnam are now effectively shut out of the United States, cheap goods are expected to flood other Asian markets.Japan’s Chief Cabinet Secretary Yoshimasa Hayashi declined to comment when asked about the possibility of retaliation against U.S. tariffs.Japanese Chief Cabinet Secretary Yoshimasa Hayashi: We believe that the recent US tariff measures may have a significant impact on the multilateral trading system, and we strongly call on the United States to exclude Japan from these measures.

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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