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The extremely volatile last full trading week of October ended on Friday, October 28. Meetings of the three largest world central banks (Canada, the eurozone, Japan) were held. If the decisions taken by the European Central Bank and the Bank of Japan on interest rates coincided with market expectations, then the Bank of Canada made an unexpected decision, surprising investors. The bank raised its interest rate by 50 basis points to 3.75%, although markets had expected a 75 bp hike. The decision appears to have been prompted by growing concerns about the threat of a slowdown in the economy and a deepening global recession, and disappointed market participants.

Next week, market participants will focus on two main and key events: the Federal Reserve meeting and the release of the monthly report of the US Department of Labor for October.

In addition, the Reserve Bank of Australia and the Bank of England will also hold their meetings on monetary policy issues, moreover, the RBA meeting w

Are You Ready Australian Dollar (AUD)? Reserve Bank Of Australia Decides On The Cash Rate Today!

Are You Ready Australian Dollar (AUD)? Reserve Bank Of Australia Decides On The Cash Rate Today!

ING Economics ING Economics 06.09.2022 09:11
Reserve Bank of Australia rate action today's main focus Source: shutterstock Macro outlook Global: US markets were closed for Labor Day yesterday, though European bourses were mostly in the red and if early trading out of New Zealand is any guide, Asia Pacific markets will not open today in an ebullient mood. There is no Treasury pricing to consider today because of yesterday’s holiday. But bond futures seem to suggest some further upward creep in 10Y yields today. EURUSD is roughly unchanged from this time yesterday, though did have a look at pushing below 0.988 before recovering to sit at 0.994 currently. The AUD is looking a touch stronger at 0.6814, and Cable is also looking a bit less weak at 1.1555 as the UK takes on a new Prime Minister. The JPY lost some further ground yesterday but is looking a bit perkier in early trading today, moving down to 140.46. Asian currencies were mostly soft against the USD yesterday.  G-7 Macro: There’s not much on the G-7 Macro calendar today and the main overnight news is the token supply target cut by OPEC+ (see here for more on this) Australia: The Reserve Bank of Australia (RBA) will decide how much to raise the cash rate today, with most analysts looking for a 50bp increase to 2.35%, though a few are forecasting only a 25bp move. Analysts have been making a lot out of some text in recent RBA statements noting that rates were not on a "preset path", though it seems a bit of a leap to view this as code for “rates will be increased at a slower pace”, which is how some are viewing it. Still, we’ll know soon enough. Philippines: Philippine August inflation is set for release today.  Market expectations point to a 6.4%YoY rise driven largely by substantial increases in the price of food, transport and utility items.  Transport groups have lobbied for a fare price increase which is expected to be granted within the week.  Meanwhile, storm damage from the recent typhoon will also likely nudge up prices for vegetables and fruit in the near term.  We expect inflation to stay elevated with the central bank likely hiking rates at each of the remaining policy meetings over the rest of the year.      What to look out for: ECB meeting Philippines CPI inflation (6 September) Australia RBA meeting (6 September) Taiwan CPI inflation (6 September) US ISM services (6 September) Australia GDP (7 September) China trade (7 September) Taiwan trade (7 September) US trade balance (7 September) Japan GDP (8 September) Australia trade balance (8 September) ECB policy meeting (8 September) US initial jobless claims (8 September) Philippines trade (9 September) China CPI inflation (9 September) US wholesale trade (9 September) Read this article on THINK TagsEmerging Markets Asia Pacific Asia Markets Asia Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Poland's Inflation Expected to Reach Single Digits in August, but Disinflation to Slow Down

RBA's Decision Didn't Make AUD (Australian Dollar) Increase. Cash Rate May Reach 3% By The End Of 2022

Kenny Fisher Kenny Fisher 07.09.2022 15:17
AUD/USD has posted slight losses today, trading at 0.6726. This follows a disastrous Tuesday, when the Aussie fell 0.92%. Earlier, AUD/USD fell as low as 0.6999, its lowest level since July 14th. Australian GDP within expectations Australia’s GDP for Q2, released earlier today, has helped stabilize a wobbly Australian dollar. GDP posted a 0.9% gain, just shy of the estimate of 1.0% and above the 0.8% in Q4. Consumer spending remains robust, and the economy was supported by strong export numbers, as commodity prices remain high. The Australian dollar’s woes seem more a case of US dollar strength than AUD weakness. We are seeing global interest rate continue to head higher, which has dampened the appetite for risk-related assets, such as the Australian currency. An aggressive Federal Reserve, supported by solid US numbers, has boosted the greenback. Tuesday’s US ISM Services PMI rose to 56.9 in August, up from 56.7 in July and higher than the 55.1 estimate. The report pointed to an increase in business activity and strong consumer demand, despite high inflation and rising interest rates. The RBA delivered a fourth straight hike of 0.50% on Tuesday, but the sizeable increase failed to boost the Australian dollar, as the move had been anticipated by the markets. The Australian dollar has not been responsive to recent RBA moves, losing ground yesterday and after the July meeting. The cash rate is now at 2.35%, which is expected to hit 3% by the end of the year, with further hikes expected in 2023. Today’s move brings rates close to the neutral level of around 2.5%, which means that the RBA is likely to deliver one more 50bp hike and then scale back to 25bp increases, contingent on inflation and the strength of the labour market. AUD/USD Technical 0.6737 is a weak resistance line. Above, there is resistance at 0.6846 There is support at 0.6661 and 0.6552   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Canadian dollar steady ahead of BoC meeting - MarketPulseMarketPulse
Supply Trends Resurface: Analyzing the Impact on Market Dynamics

Australian Dollar (AUD): What Does The Employment Data Mean To Reserve Bank Of Australia?

ING Economics ING Economics 15.09.2022 12:12
A 33,500 increase in employment was very close to the consensus expectation (+35,000), though the slight uptick in the unemployment rate may encourage the Reserve Bank of Australia (RBA) to slow to a 25bp hike at its next meeting 33,500 Employment gain From previous month As expected Not much to take away from this report With the headline employment number more or less in line with the consensus forecast, made up from a solid 58,800 increase in full time jobs, offsetting a 25,200 decline in part-time jobs, this report doesn't really signify anything for forthcoming RBA policy decisions. However, with the RBA suggesting that it is looking for excuses to slow the pace of tightening from here on, there is equally nothing here to stop them from doing that at their October meeting if nothing else comes along to upset that view.  Australian unemployment rate Turning point? Source: CEIC Unemployment rate ticks up One factor that helps the 25bp rather than 50bp view is that the unemployment rate ticked a bit higher in August, rising from 3.4% to 3.5%. The numbers of unemployed rose by 14,100 which mostly reflects an increase in those entering the labour force looking for work (possibly because it is harder to make ends meet with inflation running above 6%). So this doesn't really signify a genuine softening of the labour market. But it maybe signifies that this is coming closer.  Market reaction to the data was fairly muted, except for a temporary AUD sell-off as the figures were initially incorrectly reported as showing no employment change.  Read this article on THINK TagsReserve Bank of Australia Australian Unemployment Australian labor report Australian employment Australia Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Supply Trends Resurface: Analyzing the Impact on Market Dynamics

This One May Affect Australian Dollar (AUD)! Look At The Australian Retail Sales! What Could It Mean For Reserve Bank Of Australia?

ING Economics ING Economics 28.09.2022 11:22
Following the 1.3%MoM gain in July, the faster-than-expected 0.6%MoM August increase in retail sales throws doubt on the conjecture that the Reserve Bank of Australia (RBA) can begin to ease back on the pace of rate increases at forthcoming meetings Australian retail sales Source: Shutterstock 0.6% August retail sales MoM% Better than expected Household sector shrugging off rate hikes If the Reserve Bank of Australia's rate tightening is slowing the economy, it isn't really evident in the latest retail sales figures for August. The headline sales number registered growth of 0.6%MoM. This was admittedly down from the super-strong 1.3% gain in July. But following such a strong July figure, more statistical pull-back might have been expected if the underlying pace of sales were indeed slowing. Instead, the 3-month annualized rate of retail sales growth is still running at more than 8%, which even allowing for re-opening effects (these should be largely if not wholly through the pipeline by now) looks inconsistent with an economy that only needs modest rate hikes from here on. That prospect of a slowdown in the pace of tightening has been fostered by some official RBA comments, though it is looking increasingly at odds with the very hawkish US Fed rhetoric, the slide in the AUD, and now, the run of domestic data. Retail sales by type (MoM%) Still running strong Australian retail sales August 22 Source: CEIC, ING What's driving sales? Indeed, even the components of the latest sales numbers don't suggest much slowdown, with sales at department stores leading the way, followed by household goods and dining out. Clothing and the miscellaneous "other" section were the only weak spots. This breakdown in no sense suggests "belt-tightening".   2Y Australian government bond yields rose on the news, but this didn't provide much help for the AUD, as the US White House appeared to rule out a plaza-style currency agreement providing further fuel for the USD against the AUD and other G-10 currencies.  Read this article on THINK TagsRetail sales Reserve Bank of Australia Australia AUD Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Oil Prices Soar on Prospect of Soft Landing, Eyes Set on $80 Breakout

On Thursday S&P 500 (SPX) Lost 2.11%, Nasdaq Went Down By 2.84%

ING Economics ING Economics 30.09.2022 08:27
Equities and FX decouple as we end the quarter Source: shutterstock Macro outlook Global markets: The bounce didn’t last long. Both S&P500 and NASDAQ fell sharply again on Thursday, the S&P by 2.11% and the NASDAQ by 2.84%. That puts year-to-date losses at respectively 23.62% and 31.37%. And we’d be inclined to argue that we haven’t yet seen the bottom. The S&P500, for example, is sitting just around its June lows, so any break below this level sets the scene for some substantial further declines. On the positive side, equity futures are pricing in small gains at today’s open, but that's a long way from saying that stocks will rally into the weekend and the end of the quarter. UK Gilts gave back some of their gains yesterday on the Truss government’s insistence on sticking to its mini-budget, and yields have risen across the UK curve, though this doesn’t seem to have the market’s eye in the same way it did earlier this week. 2Y US Treasury yields headed up 5.8bp to 4.192% and the yield on the 10Y bond rose a similar amount to 3.786%. 10Y Bunds rose 5.8bp to 2.14%, hurt by a 10% YoY September inflation print (10.9% for the harmonized index). And while this is cementing thoughts of a 0.75% rate increase at the next ECB meeting, that seems like a lame response in a month where the price index rose by 2 percentage points. For now, currency markets seem to disagree, and the EURUSD has risen to 0.982, though this seems a little incongruous against the data backdrop. Other G-10 currencies also did better against the USD. The AUD is now back up above 65 cents, while the GBP has risen to 1.1145 – a long way from the 1.035 low of the week (and approx. last 4 decades!). Can this last? It seems a long shot as there’s plenty more bad news to be priced in. The JPY has also had a reprieve, and is back to 144.42, while the CNY led APAC’s FX gains, gaining by more than a per cent to 7.1249 onshore. G-7 Macro: Besides the unpleasant German inflation data, the macro picture was quite thin, with some marginal upward revisions to 2Q22 US GDP, and a lower than expected initial claims figure suggesting that the Fed still has its work cut out to slow the economy enough to bring inflation down. Today, we see the full European inflation picture for September, which is likely to exceed the 9.7%YoY consensus estimate. This won’t have been adjusted yet for the German figures. US Personal income and spending data will show how consumer spending held up in August together with the latest PCE inflation figures.  And we round off the week with the University of Michigan consumer sentiment (and inflation expectations) figures. China: We expect the manufacturing PMI to be under 50 as manufacturing for real estate construction will still be in monthly contraction. Furthermore, export demand is waning and that could affect manufacturing activity for holiday-season exports. However, services should continue to pick up as Covid measures become more localised. India: The Reserve Bank of India (RBI) meets today to decide on rate policy and the following three factors are relevant to that decision: 1) Inflation is 7.0%, a full per cent above the top of the RBI's target range 2) it is heading in the wrong way. 3) RBI commentary has been clear about the need to focus on fighting inflation. Put that all together and it looks likely that the RBI will deliver a further 50bp of tightening today, taking the repo rate to 5.9%. Later this evening, we will also get India’s fiscal deficit figures for August. Although all major rating agencies have India’s long-term foreign credit rating at "stable', and the deficit data year-to-date seem on track to meet the government’s 6.4% (GDP) target, it wasn’t that long ago that Fitch raised their outlook from negative. The deficit numbers have been whipped around by government subsidies and attempts to limit the pass-through of high energy prices to the consumer, so these are still worth a quick look. South Korea: Industrial production dropped more than expected in August, recording a -1.8%MoM decline (vs -1.3% in July and -0.8% market consensus). Automobile production rebounded (8.8%) but the declines in semiconductors (-14.2%) and petrochemicals (-5.0%) were bigger. We believe that re-opening will support 3QGDP, but thereafter, there should be a sharp deceleration. We also now expect only a 0.1% QoQ gain in 3Q22 (vs 0.7% in 2Q). Yesterday’s business survey outcomes were also quite weak, with manufacturing sentiment rapidly deteriorating to the lowest level since October 2020. Also, today’s forward-looking construction orders data were soft, suggesting more recessionary signals in the coming quarters. Japan: Japan’s data releases surprised the market on the positive side. The jobless rate edged down to 2.5% (vs 2.6% in July), in line with the market consensus. The Jobs-to-applications ratio continued to rise (has risen for several months in a row). And industrial production in August not only recorded a third monthly rise (2.7% MoM sa), but also beat the market expectation significantly (0.2%). We will revise up third quarter GDP soon based on today’s releases. The stronger jobs market is also a good sign for wage growth together with solid production gains. However, we think it is still too early to tell because Japan is reopening at a slower pace than other Asian countries and the reopening effects are just kicking in. With growing global recession headwinds, the BoJ will likely take its time to see whether Japan can still produce solid outcomes in a sustainable way. What to look out for: US core PCE, personal spending and Michigan sentiment South Korea industrial production (30 September) Japan labor market data (30 September) China official and Caixin PMI manufacturing (30 September) India RBI meeting (30 September) Hong Kong retail sales (30 September US personal income, personal spending and core PCE (30 September) US University of Michigan sentiment (30 September) Read this article on THINK TagsEmerging Markets Asia Pacific Asia Markets Asia Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Inflation slowdown may let Reserve Bank of Australia go for 50bp or inaction

Forex: Australian Dollar To US Dollar (AUD/USD) - Technical Look And Expectations - 17/10/22

InstaForex Analysis InstaForex Analysis 17.10.2022 15:22
  As of writing, AUD/USD is trading near 0.6250, just below the first notable resistance at 0.6255 (200 EMA on the 15-minute chart). Given the strong bearish momentum of the overall downward trend in AUD/USD, we can expect a rebound and a resumption of decline already near this resistance level.     If it is broken, then the next point of the upward correction will be the level of 0.6325 (through it passes the resistance level in the form of a 200-period moving average on the 1-hour chart). But even after its theoretically possible breakdown, the corrective growth of AUD/USD will be limited, at least, by the important resistance levels of 0.6545, 0.6600, 0.6620 (50 EMA on the daily chart). In the main scenario, we expect a rebound from the current levels and a resumption of the decline. More conservative AUD/USD sellers will probably decide to wait for the breakdown of the local support levels of 0.6200, 0.6170.     Support levels: 0.6200, 0.6170, 0.5975, 0.5665, 0.5510 Resistance levels: 0.6255, 0.6325, 0.6455, 0.6500, 0.6545, 0.6620, 0.6685 Trading Tips Sell Stop 0.6220. Sell Limit 0.6320. Stop-Loss 0.6355. Take-Profit 0.6200, 0.6170, 0.5975, 0.5665, 0.5510 Buy Stop 0.6355. Stop-Loss 0.6290. Take-Profit 0.6400, 0.6455, 0.6500, 0.6545, 0.6620, 0.6685   Relevance up to 12:00 2022-10-22 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/324495
The Melbourne Institute Inflation Gauge For Australia Rose More Than Expected

We're past and ahead of important economic events! This week, i.a., Reserve Bank of Australia decides on interest rate!

InstaForex Analysis InstaForex Analysis 30.10.2022 18:38
The extremely volatile last full trading week of October ended on Friday, October 28. Meetings of the three largest world central banks (Canada, the eurozone, Japan) were held. If the decisions taken by the European Central Bank and the Bank of Japan on interest rates coincided with market expectations, then the Bank of Canada made an unexpected decision, surprising investors. The bank raised its interest rate by 50 basis points to 3.75%, although markets had expected a 75 bp hike. The decision appears to have been prompted by growing concerns about the threat of a slowdown in the economy and a deepening global recession, and disappointed market participants. Next week, market participants will focus on two main and key events: the Federal Reserve meeting and the release of the monthly report of the US Department of Labor for October. In addition, the Reserve Bank of Australia and the Bank of England will also hold their meetings on monetary policy issues, moreover, the RBA meeting will be held on Tuesday. Ahead of this event, AUD/USD shows mixed intra-weekly dynamics, although the overall global downward trend of the pair remains in place for now.     When this article was written on Friday, AUD/USD was trading near the 0.6413 mark, falling towards the support level of 0.6382. Its breakdown would have confirmed the resumption of downward dynamics, although short positions can be opened already in the market, limiting the loss with a stop loss above 0.6480. As a result of the October meeting, the RBA raised the interest rate by 0.25%, disappointing bulls on the Australian dollar. The RBA cited weakening growth prospects for the global economy as the main reason for this decision. The decision to raise the rate by 0.25% came as a surprise to market participants who had expected a 0.50% increase. While the RBA's accompanying statement said that "the central bank remains strongly committed to bringing inflation back to its target" and "expects further interest rate hikes in the coming period", market participants viewed the decision as a mild one to further strengthen the Australian dollar. It fell sharply immediately after the announcement of the RBA's decision. In turn, at the very beginning of this week, the assistant governor of the RBA, Christopher Kent, said that "the RBA board expects further interest rate hikes in the coming period," but "the size and timing of the rate hike will depend on incoming data." Such a "vague" formulation of the thesis about the prospects for the RBA interest rate cannot serve as a basis for any significant strengthening of the AUD, while other major world central banks are aggressively raising their interest rates. Now, at Tuesday's meeting, the RBA is widely expected to raise interest rates by 0.25%. This will be the second consecutive increase of 0.25%. How market participants will react to it, while the Fed and other major world central banks continue to move with more confident steps in the cycle of tightening their monetary policies, is not difficult to guess. AUD is unlikely to strengthen much after such a decision by the RBA. Although, a lot will also depend on the accompanying statements of the bank's management. Tough rhetoric of their statements regarding future RBA interest rate hikes may support the Australian dollar. In general, as we have already noted above, the general global downward trend of the pair is still in force. Relevance up to 11:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/325640

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