CAFX Market Update 01/2/2023

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After hitting an intraday low of 0.6984, the Aussie dollar has made a modest recovery to trade around 0.7050 against the US dollar. The pair first sustained losses on the back of worse-than-expected local data and US dollar strength.

Aussie Retail Sales tumbled 3.9% (MoM) versus the expected -0.3% and a prior month’s print of 1.4%. Retail spending dipped due to high-cost pressures, though consumers were reported to have responded to these pressures by starting holiday shopping earlier in November to take advantage of heavy promotional activity.

Elsewhere, China reported upbeat PMI figures for January, with Manufacturing climbing to 50.1 from 47 in December and Non-manufacturing rising to 54.4 from the previous month’s 41.6. However, better-than-anticipated data did little to boost the risk-sensitive Aussie as markets remain cautious amid uncertainty about a strong recovery in China.

US dollar strength ahead of the Fed interest rate decision, scheduled for tomorrow at 6:00 am AEDT, turns out to be another contributing factor to the Aussie dollar’s downward trajectory. A prevalent cautious market mood seems to be encouraging haven flows towards the dollar, supporting the weakness of the Aussie dollar.


China Caixin Manufacturing PMI (Jan)
United Kingdom Manufacturing PMI (Jan)
Eurozone Core CPI (YoY)  
    CPI (MoM)    
    Unemployment Rate (Dec)  
United States Manufacturing PMI (Jan)
    ISM Manufacturing PMI (Jan)
    JOLTs Job Openings (Dec)
    Crude Oil Inventories  
    FOMC Statement  
    Fed Interest Rate Decision  

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