Australian dollar weakens as Fed warms up

au.investing.com/analysis/australian-dollar-weakens-as-fed-warms-up-200497282

By David Llewellyn-Smith | Jan 18, 2022 10:50

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DXY was up again last night:

Australian dollar was mixed:

Oil is still hot:

Dirt mixed:

Miners (LON:GLEN) were soft:

EM stocks (NYSE:EEM) softer:

EM debt (NYSE:HYG) softest:

US markets were closed for Martin Luther King Day. Westpac has the wrap:

Event Wrap

Italian CPI inflation in December was finalised unchanged from the preliminary at 4.2%y/y).

Canadian manufacturing sales rose 2.6%m/m (est. 3.0%m/m, prior revised from 4.3%m/m to 4.6%m/m). The Bank of Canada’s business outlook survey rose to another high, increasing the chances of a more proactive stance at the next meeting on Jan 26^th.

The UK is poised to reduce its relatively limited Plan B covid restrictions (which legally expire on 26^th), allowing a return to work and greater access to public events into the end of the month. Daily cases have fallen sharply to 84,429, from almost 245,000 on 4^th Jan.

Event Outlook

NZ: REINZ housing market update for December should reflect extended buoyancy. The NZIER quarterly survey of business opinion is also released.

Japan: The final estimate of November’s robust industrial production result should indicate that supply chain issues are starting to alleviate across some manufacturing sectors.

Eur/UK: The January ZEW survey of expectations will likely report weakening confidence due to emergence of omicron. Meanwhile, the UK’s economic recovery should see the ILO unemployment rate remain low in the three months to November (market f/c: 4.2%).

US: The January Fed Empire state index will provide a view on manufacturing in NY state (market f/c: 25.0) and the NAHB housing market index is expected to remain stable at a high level (market f/c: 84).

Here’s the chart that is tormenting forex markets. Although US rate spreads have widened, 2023 have fallen away after the death of Biden stimulus:

The big question now is when to discount it. I still think we have another leg of DXY strength as the Fed is pushed to overtighten and risk assets deflate but it will be the last one.

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Central Banks

Interest Rates

Next Meeting

RBA

0.35%

Jun 07, 2022

BOE

1.00%

Jun 16, 2022

ECB

0.00%

Jun 09, 2022

FED

1.00%

Jun 15, 2022

SNB

-0.75%

Jun 16, 2022

BOC

1.00%

Jun 01, 2022

RBNZ

2.00%

Jul 13, 2022

BOJ

-0.10%

Jun 17, 2022

CBR

11.00%

Jun 10, 2022

RBI

4.00%

Jun 08, 2022

PBOC

3.70%

BCB

12.75%

Jun 15, 2022

S&P/ASX 200	7,164.90	+59.00	+0.83%
ASX 200 Futures	7,165.5	-13.0	-0.18%
ASX All Ordinaries	7,399.60	+60.30	+0.82%
US 500	4,050.8	-7.0	-0.17%
Dow Jones	32,637.19	+516.91	+1.61%
China A50 Futures	13,290.0	+115.0	+0.87%
Dollar Index	101.550	-0.308	-0.30%

Crude Oil WTI	114.22	+0.13	+0.11%
Natural Gas	8.842	+0.033	+0.37%
Gold	1,852.22	+4.62	+0.25%
Silver	22.081	+0.116	+0.53%
Copper	4.2880	+0.0148	+0.35%
US Sugar #11	19.54	-0.14	-0.71%
US Coffee C	225.78	+8.73	+4.02%

AUD/USD	0.7125	+0.0027	+0.38%
EUR/USD	1.0752	+0.0028	+0.26%
USD/JPY	126.82	-0.32	-0.25%
GBP/USD	1.2648	+0.0054	+0.43%
GBP/JPY	160.38	+0.26	+0.17%
AUD/JPY	90.36	+0.12	+0.14%
USD/CAD	1.2758	-0.0014	-0.11%

CSL	269.02	-0.87	-0.32%
Woolworths	34.235	+0.065	+0.19%
ANZ Banking Group	25.595	+0.065	+0.25%
Commonwealth Bank Australia	106.260	+0.830	+0.79%
Telstra Corporation.	3.905	+0.015	+0.39%
National Australia Bank	31.560	-0.010	-0.03%
BHP Billiton Ltd	43.620	+1.000	+2.35%

Australian dollar weakens as Fed warms up

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