CAFX Market Update 27/1/2023

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The Australian dollar retraced from a seven-month high of 0.7142 overnight following a string of upbeat US economic data. However, the AUD/USD pair remains firm above the 0.70 handle, trading at 0.7118 at the latest, down -0.03%.

As measured by GDP, the US economy showed clear signs of growth, with the fourth-quarter annualised rate printing 2.9% versus a forecasted 2.6%. At the same time, Durable Good Orders (Dec) recovered from its previous -1.7% print, to rise 5.6% on a monthly basis. Job market-wise, we continue to see resilience, with weekly Initial Jobless Claims data falling to 186K, below forecasts of 205K.

Having witnessed better-than-expected data from the US, markets speculate the feds may scrap the idea of raising rates by just 25 basis points in February which, in turn, boosted the US Dollar Index (DXY).

For further guidance, markets will turn to the US Personal Consumption Expenditure (PCE) Price Index (Dec), the Fed’s preferred gauge for inflation which will be released overnight. On a monthly basis, Core data is expected to print 0.3% versus the previous 0.2%. While the annual reading is foreseen to drop to 4.4% from the prior month’s release of 4.7%. Headline PCE is estimated at 5.5% (YoY), while on a monthly basis it is forecasted at 0.1%.


New Zealand ANZ Business Confidence (Jan)
Australia PPI (Q4)
United States Core PCE Price Index (Dec)  
    PCE price index (Dec)  
    Personal Spending (Dec)  
    Pending Home Sales (Dec)