Australian dollar trembles at Fed’s approach

au.investing.com/analysis/australian-dollar-trembles-at-feds-approach-200546639

By David Llewellyn-Smith | Jan 31, 2023 10:55

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EUR/USD

+0.18%

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AUD/USD

0.00%

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EEM

-0.88%

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ESM3

+0.25%

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RIO

+0.23%

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US2YT=X

+4.21%

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HYG

-0.02%

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DXY

-0.19%

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DXY finally rebounded as EUR fell:

That triggered reversals across all markets. AUD down:

Commods down:

Miners (NYSE:RIO) down:

EM stocks (NYSE:EEM) down:

Junk (NYSE:HYG) down:

US yields up:

Stocks down:

The approach of the Fed put the jitters through markets. It will probably remain hawkish despite likely reducing its hiking pace to prevent an over-loosening of financial conditions.

However, inflation is cooling fast. CorePCE has faded to 0.3% per month:

INFLATION

Though Core Services are still sticky:

COREPCE

As wage growth is still strong but is also cooling fast:

AVERAGEHOURLYEARNINGS

The market has already rallied on these numbers What will matter for the Fed is how it frames the terminal rate and any easing ahead.

I doubt the dot plot will be dovish yet so that may support a return to AUD weakness.

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Central Banks

Interest Rates

Next Meeting

RBA

3.60%

Apr 04, 2023

BOE

4.25%

May 11, 2023

ECB

3.50%

May 04, 2023

FED

5.00%

May 03, 2023

SNB

1.50%

Jun 22, 2023

BOC

4.50%

Apr 12, 2023

RBNZ

4.75%

May 24, 2023

BOJ

-0.10%

Apr 28, 2023

CBR

7.50%

Apr 28, 2023

RBI

6.50%

Apr 03, 2023

PBOC

3.65%

BCB

13.75%

May 03, 2023

S&P/ASX 200	6,962.00	+6.80	+0.10%
ASX 200 Futures	6,991.0	+13.5	+0.19%
ASX All Ordinaries	7,143.80	+6.20	+0.09%
US 500	3,980.3	+9.3	+0.23%
Dow Jones	32,369.85	+132.32	+0.41%
China A50 Futures	13,030.0	+25.0	+0.19%
Dollar Index	102.648	-0.116	-0.11%

Crude Oil WTI	70.47	+1.21	+1.75%
Natural Gas	2.250	-0.111	-4.70%
Gold	1,975.35	-26.35	-1.32%
Silver	23.180	-0.159	-0.68%
Copper	4.0475	-0.0275	-0.67%
US Sugar #11	20.96	+0.14	+0.67%
US Coffee C	178.80	-0.45	-0.25%

Australia 10Y	3.263	+0.070	+2.19%
Australia 5Y	2.970	+0.073	+2.52%
New Zealand 10Y	4.070	0.015	0.38%
U.S. 10Y	3.477	+0.099	+2.93%
Japan 10Y	0.299	+0.006	+2.22%
China 10Y	2.874	0.014	0.49%
Singapore 10Y	2.899	+0.009	+0.33%

CSL	288.94	+0.45	+0.16%
Woolworths	37.550	+0.090	+0.24%
ANZ Holdings	22.440	-0.080	-0.36%
Commonwealth Bank Australia	95.070	-0.770	-0.80%
Telstra Group	4.210	+0.040	+0.96%
National Australia Bank	27.410	+0.230	+0.85%
BHP Group Ltd	43.550	-0.090	-0.21%

Australian dollar trembles at Fed’s approach

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