Send Currency Update Published on May 6th 2024

In The News 🌏 Market Conditions and What to look out for this week 🗓️

1. Speculation on RBA Rate Hike:

   • Capital Economics is forecasting a 25 basis points rate hike, citing stickier and stronger inflation than expected by the Reserve Bank of Australia (RBA).

   • The RBA has historically increased interest rates when the trimmed mean quarterly inflation has been at least 1 percent, which was the case in the March quarter.

2. AUD/USD Pair Strength:

   • The AUD/USD pair extended its upside around 0.6610 during Monday's Asian session.

   • Downbeat US employment data for April exerted some selling pressure on the US Dollar, supporting the Australian Dollar.

3. Gold Price Movement:

   • Gold prices fell more than 2% for the second consecutive week, experiencing renewed bearish pressure despite a small recovery.

   • The near-term technical outlook suggests a loss of bullish momentum as market focus shifts to Federal Reserve communications.

4. Oil Market Tightening:

   • Bloomberg reports price hikes to Asia for crude oil for the third consecutive month as Saudi Arabia works to tighten the oil market.

   • The June official selling price of Arab Light crude for customers in Asia increased by 90 cents to $2.90 a barrel, exceeding estimates for a 60 cent increase.

   • Prices for other varieties also saw increases from May levels.

   Last Week 🗞️

   1. Australian Dollar Strengthens on Inflation Figures:

      • Australia's first-quarter inflation figures revealed a stronger-than-expected CPI inflation of 3.5% year-on-year, surpassing the market consensus of 3.4%.

      • The Australian Dollar (AUD) emerged as the best-performing major currency on the day of the announcement, indicating increased market confidence in the currency.

      • Notably, the acceleration of inflation on a quarter-to-quarter basis, from 0.6% in Q4 to 1.0% in Q1, suggests a potential uptick in price pressures.

      • Key measures of core inflation, closely monitored by the RBA, showed signs of increasing price pressures, with the weighed mean and trimmed mean both accelerating quarter-to-quarter.

   2. China's Industrial Profits and Gold Price Movement:

      • China's industrial profits in March 2024 declined by 3.5% year-on-year, slowing the gains made in the quarter compared to the first two months.

      • Meanwhile, the gold price edged lower to $2,335 in Monday's early Asian session, influenced by doubts about near-term US Federal Reserve rate cuts amidst firm US inflationary pressures.

   3. GBP/USD Decline Influenced by US Inflation Data:

      • GBP/USD registered a decline of 0.27%, impacted by US inflation data suggesting potential delays in Federal Reserve rate cuts.

      • The pair's inability to break above the 200-day moving average highlights its downward bias, with support levels now in focus.

   4. Market Outlook:

      • The Federal Reserve's interest rate decision on Wednesday will be closely watched, with recent data indicating firm US inflationary pressures.

      • Potential further losses for GBP/USD may occur, targeting 1.2400 and possibly extending to the year-to-date low of 1.2300.

Things to look out for this week; 

• Tuesday 7th May

  🇦🇺 Cash Rate - AUD

  🇦🇺 RBA Monetary Policy Statement - AUD

  🇦🇺 RBA Rate Statement - AUD

• Thursday 9th May

  🇬🇧 BOE Monetary Policy Report - GBP

  🇬🇧 Monetary Policy Summary - GBP

  🇬🇧 MPC Official Bank Rate Votes - GBP

  🇬🇧 Official Bank Rate - GBP

  🇬🇧 BOE Gov Bailey Speaks - GBP

  🇺🇸 Unemployment Claims - USD

• Friday 10th May

  🇺🇸 30-y Bond Auction - USD

  🇬🇧 GDP m/m - GBP

  🇨🇦 Employment Change - CAD

  🇨🇦 Unemployment Rate - CAD

• Saturday 11th May

  🇺🇸 Prelim UoM Consumer Sentiment - USD

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