AUDUSD Day’s Range: 0.73233 – 0.73816
TheFederal Reserve indicated to investors that they are moving closer to assettapering, though Fed Chairman Powell indicates that there is still some way togo until the full labor market recovery.
Powellsaid to a press conference on Wednesday that “We are not there, and we seeourselves as having some ground to cover to get there”. The FOMC maintainedasset purchase at $120 billion per month and held interest rate in a range nearzero until substantial recovery was made from employment and inflation.
TheFOMC statement has few changes but none of them has a significant marketimpact. The AUDUSD appreciated after the FOMC meeting because Fed admittedinflation is higher than expected but still believes the price pressure istemperate. Furthermore, there is no decision on the timing of asset tapering.Although Powell said the Fed looked at reducing bond purchasing and the Fedacknowledged improvement on the U.S. economy, the Central bank is not at thelevel where ‘substantial’ progress has been achieved. The Fed is no rush toreduce asset purchase and it is unlikely to taper assets in August. Stocks andgovernment bond prices rallied on Wednesday after the FOMC meeting
Investorscontinued to weigh on NSW’s extension of strict lockdown. According to theAustralian Bureau of Statistics, headline inflation rose 0.8% in the threemonths to June and 3.8% annually. The Trimmed Mean Inflation – the RBA’spreferred measure of inflation – was 0.5% for the quarter and 1.6% annually,which is slightly higher than the RBA’s forecast of 1.5%. The targetinflation set by the RBA was ranging from 2% to 3% and it is unlikely to bereached in the upcoming months due to the lockdown in Greater Sydney.
Data:
- AU Q2 CPI & Trimmed Mean CPI : 0.8% & 0.5% v. 0.7% & 0.5% exp.
- EU July German GFK Consumer Climate : -0.3 v. 0.9 exp.
- CA June H/line CPI : 0.3% v. 0.4% exp.
- US EIA Crude Oil Inventories : -4.1Mio v. -2.6Mio exp.
- US FOMC Statement and Press Conference : <0.25% v. <0.25% exp.
Major moves in the market:
Stocks
- S&P 500 futures were little changed as of 8:23 a.m. in Tokyo. The S&P 500 was steady.
- Nasdaq 100 futures lost 0.2%. The Nasdaq 100 rose 0.4%
- Nikkei 225 futures rose 0.8%
- Australia’s S&P/ASX 200 Index futures added 0.3%
- Hang Seng Index futures jumped 3.1% earlier
Currencies
- The Japanese yen was at 109.90 per dollar
- The offshore yuan was at 6.4893 per dollar
- The Bloomberg Dollar Spot Index was little changed
- The euro was at $1.1845
Bonds
- The yield on 10-year Treasuries declined one basis point to 1.23%
- Australia’s 10-year bond yield held at 1.15%
Commodities
- West Texas Intermediate crude was at $72.43 a barrel
- Gold was at $1,809.15 an ounce
Upcoming data:
- NZ July ANZ Business Confidence : -0.6 prev.
- AU Q2 Import Prices : 1.1% exp.
- EU ECB Monetary Policy Meeting Accounts
- US Q2 Advance GDP : 8.5% exp.
- US Weekly Unemployment Claims : 382K exp.
- US June Pending Home Sales : 0.1% exp.
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