Australian Dollar, AUD/USD, US Dollar, ASX 200, RBA, Federal Reserve – talking points
- The Australian dollar slipped lower despite economic growth being intact for now
- Global interest rates are moving higher, undermining growth and risk-bound assets
- RBA action did little to boost AUD. WSick US Dollar Moves Dominate AUD/USD?
The Australian dollar then dipped 2Q quarterly GDP came in as prognosis at0.9% and aagainst the previously 0.8%which has been revised down to 0.7%.
Aannual GDP by end Julywas 3.6% instead of 3.4% expected and 3.3% earlier. It shows upward revisions from previous quarters in the 3rd and 4th quarter of 2021.
Australia’s ASX 200 stockindex slightly strengthened in the news afterwards opening below. The latest weakness came after last month’s Federal Reserve Symposium in Jackson Hole.
Fed Chair Jerome Powell, in prepared remarks, made the case for much higher interest rates than the market had previously anticipated. As a result, Treasury yields have surged much higher, helping the US dollar to a 24-year high against the Japanese yen.
The Fed’s hawkish rhetoric has raised fears of a sharp growth slowdown and global stock indices are reflecting the deteriorating outlook, including the ASX 200.
Today’s GDP Figures come after that theThe Reserve Bank of Australia raised its interest rate target by 50 basis points yesterday, the fifth hike since it started in May. That too was unable to raise the Aussie sustainably.
A sustained contraction in monetary conditions could further erode growth-linked assets like the Aussie and ASX 200. Bank Bill futures markets are pricing in at least 25 basis points of tightening at the next RBA meeting in October.
Thim at the latest Australian trade Data for AAugustwill be published tomorrow and according to a Bloomberg poll the market forecast a EUR 14.65 billion trade surplus for the month. This comes down from the previous month’s record-breaking A$17.67 billion.
Iron ore exports continue to contribute significantly to the nation’s bottom line. All Australian miners produce less than US$20 per tonne. The Singapore Exchange (SGX) and the Dalian Commodity Exchange (DCE) are currently trading at around USD 100 per ton.
That total The AUD/USD reaction appears to be related to US Dollar strength rather than AUD weakness. The Aussie is weakr to a lesser extent against most other G-10 currencies today.
AUD/USD SHORT TERM CHART
Chart Created in TradingView
— Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel use the comments section below or @DanMcCathyFX on twitterright
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