The latest Send Payments International Currency Market Update provides an in-depth exploration of the movements seen in major currencies, including the USD, GBP, CNY, NZD, and JPY. It examines the key events that have significantly impacted the values of each of these currencies. Additionally, the report highlights what to watch in the media and financial sectors throughout this week, ensuring that readers stay informed about potential market shifts and developments.

In The News! 🌏

– Market Conditions and What to Look out for this Week 🗓️

Jackson Hole and the Fed

• Central bankers, academics, and journalists are gathering at the mountainside resort of Jackson Hole on Friday, where Federal Reserve Chair Jerome Powell is set to deliver a much-anticipated speech. This event has become known as the "Davos for central bankers" over the past four decades.

• Powell is expected to outline a road map for US interest rates in an address that will be highly significant economically and politically.

• While his immediate audience includes central bankers and experts at the Jackson Lake Lodge, Wall Street will analyse the speech closely for clues on the Fed's future policy moves. Rivals in the US presidential race, Kamala Harris and Donald Trump will also be watching, with the November election looming.

• Financial markets are on edge, with every indicator of the health of the US economy being scrutinised. Earlier this month, concerns about a potential recession and Japanese interest rates triggered a brutal stock sell-off, but US markets later rebounded with their best day of trading in nearly two years.

• Harris hopes the Fed hasn’t left it too late to cut rates as the US economy has cooled. She wants to avoid fighting the election with the country flirting with recession. Trump will likely argue that the economy has performed poorly since his loss in 2020. Powell, a Republican, was nominated by Trump in 2017.

AUD/USD

• The Australian Dollar rose against all major currencies on Wednesday, after local labour market figures exceeded expectations for July.

• Australia’s dollar was boosted after employment rose by 58.2k in July, far exceeding the consensus of a 20k increase. This marked a second consecutive large increase, with gains concentrated in full-time employment.

• Despite the unemployment rate edging higher to 4.1%, some local economists suggest this should be the key indicator for markets and the central bank. Carol Kong, an economist and currency strategist at Commonwealth Bank of Australia, noted that the unemployment rate is crucial for the monetary policy outlook.

• AUD/USD trades on a stronger note near 0.6670 in Monday’s early Asian session. The RBA’s hawkish stance and a rise in the US University of Michigan sentiment are boosting the Aussie against the USD.

• The AUD/USD pair kicks off the week on a positive note, with the Federal Reserve’s potential rate cut dragging the US Dollar lower. The minutes of the RBA Board’s August meeting and Powell's speech will be in the spotlight this week.

AUD/JPY

• AUD/JPY advances further for the second consecutive day, trading around 98.90 during the early European session on Friday. The Australian Dollar gains ground against the Japanese Yen due to improved risk sentiment following a stronger-than-expected recovery in US Retail Sales, easing concerns about a potential US recession.

• Hawkish comments from RBA Governor Michele Bullock are boosting the Aussie Dollar and underpinning the AUD/JPY cross. Bullock emphasized that the Australian central bank is focused on potential upside risks to inflation and does not foresee any rate cuts in the near future.

Australian Employment Data

• The strong Australian July employment data may prove challenging for the Reserve Bank of Australia. Gains in full-time employment could delay the RBA from moving into a full easing mode, as seen in New Zealand and potentially in the US in September.

Last Week 🗞️ Key Takeaways:

GBP/AUD

• The Pound to Australian Dollar exchange rate fell heavily on Thursday as hawkish remarks from Reserve Bank of Australia Governor Michelle Bullock helped the AUD outperform.

• GBP/AUD fell back below 1.94 as the Australian Dollar rallied, outperforming all G10 counterparts. Governor Bullock stated that inflation was likely to take longer than expected to return to the 2% to 3% target band and that the RBA would not hesitate to raise interest rates again if necessary.

AUD/USD

• The AUD/USD pair traded stronger near 0.6575 during the early Asian session on Monday.

• Hawkish messages from the Reserve Bank of Australia (RBA) and hotter Chinese inflation data provided some support to the Aussie.

• The RBA left the interest rate unchanged at 4.35% for the sixth consecutive meeting last week. Governor Michele Bullock highlighted the upside risks to inflation and reiterated that the RBA would raise rates if needed.

AUD/CNY

• -Westpac analysts forecasted the first-rate cut to occur in February 2025, postponed from the previously expected November 2024. The hawkish stance of the Australian Central Bank was likely to underpin the AUD in the near term.

• Additionally, China’s Consumer Price Index (CPI) rose by 0.5% in July, supporting the AUD, though concerns about sluggish Chinese demand persisted and might have limited the pair’s upside.

  Traders were watching Chinese Retail Sales and Industrial Production data on Thursday, as well as Australian employment data.

AUD/NZD

• While Aussie data on Tuesday might not have been enough to break the pair’s recent range between NZ$1.0975 resistance and NZ$1.0880 support, the RBNZ holding its Official Cash Rate at 5.5% for a ninth consecutive meeting could have supported the NZD.

• This could have potentially guided the AUD/NZD pair below current support, possibly testing the area.

AUD/JPY

• The AUD/JPY pair declined to 96.45 on Friday, resuming losses after three sessions of gains.

• Despite the decline, technical indicators suggested a shift towards neutral territory, with the RSI moving out of the oversold zone and the MACD showing decreasing red bars.

• In Friday's session, the pair declined by 0.65% to 96.45, extending its downward trajectory.

Things to look out for this week; 

• Tuesday 20 August

  🇨🇦 CPI m/m - CAD

  🇨🇦 Median CPI y/y - CAD

  🇨🇦 Trimmed CPI y/y - CAD

• Thursday 22 August

  🇺🇸 FOMC Meeting Minutes - USD 

  🇫🇷 French Flash Manufacturing PMI - EUR

  🇫🇷 French Flash Services PMI - EUR

  🇩🇪 German Flash Manufacturing PMI - EUR

  🇩🇪 German Flash Services PMI - EUR

  🇬🇧 Flash Manufacturing PMI - GBP

  🇬🇧 Flash Services PMI - GBP

  🇺🇸 Unemployment Claims - USD 

  🇺🇸 Flash Manufacturing PMI - USD

  🇺🇸 Flash Services PMI - USD

• Friday 23 August

  🇨🇦 Core Retail Sales m/m - CAD

  🇨🇦 Retail Sales m/m - CAD

  🇨🇦 Trimmed CPI y/y - CAD

• Saturday 24 August

  🇺🇸 Fed Chair Powell Speaks - USD 

• 🗓️ Jackson Hole Symposium @ 2pm - USD 

  🇬🇧 BOE Gov Bailey Speaks - GBP

  
  

AUD-USD 🇺🇸

Rates have increased slightly over the last week sitting at 0.6680

AUD-GBP 🇬🇧

Sitting 0.5156 the AUD - GBP has kept within its band over the last week

AUD-NZD 🇳🇿

Rates have increased since the drop in late July to 1.1029

AUD-EUR 🇪🇺

AUD to the EUR has seen a slight increase of rates at 0.6057