CAFX Market Update 04/1/2023

Welcome to our daily market update, where we help keep you informed on the latest happenings in the world of FX.
If you have any questions or would like anything further explained, please don’t hesitate to reach out to your account manager or email info@cafx.com

Macro Report

The USD dollar takes charge in the new year, jumping to a two-week high of 104.77 overnight ahead of the FOMC meeting minutes. The US dollar strength across the board was underpinned by rising Treasury yields.

The Aussie dollar has had a volatile start to the year, plunging from a high of 0.6834 to hit a low of 0.6688 amidst a stronger USD and soured sentiment evident by Wall Street edging lower. At the time of writing, the AUD/USD pair is trading at 0.6726, above its opening price of 0.6706.

Cable plummeted to a six-week low of 1.1900, just hours after USD/JPY dropped to 129.51, marking its lowest since June. EUR also fell to a three-week low circa 1.0519 against the USD.

Looking ahead, the US economic docket includes the release of Fed Meeting Minutes and ISM manufacturing PMI index for December. Given the RBA and Fed are still on a tightening path – but at different trajectories – the AUD’s outlook for 2023 remains heavily dependent on the US dollar. Additionally, the Aussie dollar’s potentials are tied to the hopes and expectations for a successful Chinese re-opening.

Key Data to Watch

Eurozone S&P Global Composite PMI (Dec)
Services PMI (Dec)
United States ISM Manufacturing Employment (Dec)
ISM Manufacturing PMI (Dec)
JOLTs Job Openings (Nov)
FOMC Meeting Minutes

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