AUDUSD: KING DOLLAR
The dollar was down on as investors digest a 75-basis points interest rate hike announced by the U.S. Federal Reserve Wednesday which is the largest since 1994.
A few hours after the Atlanta Fed's GDP tracker that had been estimating Q2 US GDP at 2.5% as recently as mid-May, cleared the last bit to zero after the disappointing retail sales report and the Fed delivered a 75 bp rate hike, warning investors and businesses to be prepared for a rough landing.
With Fed President Jerome Powell stating that there is going to be a big hike in July , It’s very clear the Fed will do whatever it takes to forcefully reduce inflation and the rate is going to be closer to 4% and maybe even go higher. The Fed also said it will reduce its balance sheet by $47.5 billion a month, which will start from June 1 and step up to $95 billion in September.
Powell stated that the Russia/Ukraine war and China's coronavirus lockdowns continued exacerbating supply chains hence inflationary pressures. By hinting at external factors, he threaded the needle well for risk assets here, giving investors a nugget of hope that we should not expect surprise moves of this size to be commonplace.”
Current forecasts sees slower growth, more inflation, and higher unemployment. It may be ill-advised to tie a rate decision, which has a variable lag before impacting the economy, with a high-frequency economic report and one that is subject to revisions.
While Powell stressed that the Fed was "strongly committed" to achieving its inflation target, the market
What seems incongruous now was Powell's repeated observation of the strength of the economy. We noted the Atlanta Fed's GDP now sees the economy consolidating this quarter after decreasing in the first quarter.
Australia's May employment report was stronger than expected and it reinforced expectation that the central bank will hike by at least another 50 bp when it meets early next month. Economists in Bloomberg's survey expected a 25k increase in May employment and Australia reported a 60.6k increase that was totally accounted for with a rise in full-time positions (69.4k). The participation rate jumped to 66.7% from 66.4%. It stood at 65.9% before COVID. The unemployment rate was unchanged at 3.9% (compared with 5.1% at the end of 2019).
With the interest rates in America rising, it makes a lot of sense that the greenback will continue to be favored. Ul
Exports to China remained depressed by the COVID lockdowns and slipped by 0.2%. Imports from China jumped by almost 26% after falling in April.
The Chinese are locking bits and pieces of their economy down again, and that will have a negative influence on the Aussie economy. After all, China is Australia’s biggest customer, and therefore it has a bit of a knock-on effect over here. The market should offer plenty of short-term opportunities for those that are looking for exhaustion.
This is an article not financial advice always do your own research
If you have any questions please leave a comment and I will answer them
And please leave a like and help support my page
A few hours after the Atlanta Fed's GDP tracker that had been estimating Q2 US GDP at 2.5% as recently as mid-May, cleared the last bit to zero after the disappointing retail sales report and the Fed delivered a 75 bp rate hike, warning investors and businesses to be prepared for a rough landing.
With Fed President Jerome Powell stating that there is going to be a big hike in July , It’s very clear the Fed will do whatever it takes to forcefully reduce inflation and the rate is going to be closer to 4% and maybe even go higher. The Fed also said it will reduce its balance sheet by $47.5 billion a month, which will start from June 1 and step up to $95 billion in September.
Powell stated that the Russia/Ukraine war and China's coronavirus lockdowns continued exacerbating supply chains hence inflationary pressures. By hinting at external factors, he threaded the needle well for risk assets here, giving investors a nugget of hope that we should not expect surprise moves of this size to be commonplace.”
Current forecasts sees slower growth, more inflation, and higher unemployment. It may be ill-advised to tie a rate decision, which has a variable lag before impacting the economy, with a high-frequency economic report and one that is subject to revisions.
While Powell stressed that the Fed was "strongly committed" to achieving its inflation target, the market
What seems incongruous now was Powell's repeated observation of the strength of the economy. We noted the Atlanta Fed's GDP now sees the economy consolidating this quarter after decreasing in the first quarter.
Australia's May employment report was stronger than expected and it reinforced expectation that the central bank will hike by at least another 50 bp when it meets early next month. Economists in Bloomberg's survey expected a 25k increase in May employment and Australia reported a 60.6k increase that was totally accounted for with a rise in full-time positions (69.4k). The participation rate jumped to 66.7% from 66.4%. It stood at 65.9% before COVID. The unemployment rate was unchanged at 3.9% (compared with 5.1% at the end of 2019).
With the interest rates in America rising, it makes a lot of sense that the greenback will continue to be favored. Ul
Exports to China remained depressed by the COVID lockdowns and slipped by 0.2%. Imports from China jumped by almost 26% after falling in April.
The Chinese are locking bits and pieces of their economy down again, and that will have a negative influence on the Aussie economy. After all, China is Australia’s biggest customer, and therefore it has a bit of a knock-on effect over here. The market should offer plenty of short-term opportunities for those that are looking for exhaustion.
This is an article not financial advice always do your own research
If you have any questions please leave a comment and I will answer them
And please leave a like and help support my page
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