Send Payments Currency Market Update - International Currency Market Conditions and What to look out for this Week ๐Ÿ—“๏ธ

AUD Performance

- The Australian Dollar (AUD) became the worst-performing G10 currency on a 1-day view in broad risk-off market sentiment, according to Rabobankโ€™s FX analyst Jane Foley.

- Despite the risk that the RBA could hike interest rates at its August 6 policy meeting, the AUDโ€™s poor performance reflected potential headwinds from continued weakness in the Chinese economy.

- Earlier this month, AUD/USD rallied as the USD weakened in response to heightened expectations of a September Fed rate cut, though most of these gains have since been wiped out.

- Recently, the AUD has been weighed down by fears stemming from Chinese growth concerns and a cut in the Chinese interest rate.

- Rabobank continued to target AUD/NZD at 1.12 in the coming weeks.

Impact of PBoC's Actions

- The Australian Dollar extended losses after the PBoC unexpectedly cut the one-year medium-term lending facility (MLF) rate by 20 basis points.

- The MLF cut, the biggest since April 2020, followed Monday's cuts in several benchmark rates.

- Chinaโ€™s off-cycle monetary policy easing could counter-intuitively hurt investor sentiment.

- Ewen Chew, a Reuters market analyst, stated the move aimed to bolster the Chinese economy, which should be supportive of the Aussie Dollar. However, surprise moves could raise more questions than they answered.

AUD/USD

- The US PCE inflation increased by 2.5% YoY in June, underscoring an improving inflation environment.

- The RBAโ€™s hawkish stance might support the Aussie as inflation is running too high.

- Rising bets that the US Federal Reserve (Fed) would begin cutting interest rates in September weigh on the US dollar (USD).

- Market participants will monitor the Australian Retail Sales on Tuesday.

- On Wednesday, the Australian Consumer Price Index (CPI) and Fed Interest Rate Decision will be in the spotlight.

AUD/JPY

- The short-term bearish trend continued, despite the minor gains, as the pair has lost more than 7% since June.

- The overall control of sellers remained, as the pair closed on a 4.30% losing week, solidifying the bearish outlook.

- The daily Relative Strength Index (RSI) increased from its previous levels, reaching 23, hinting at a possible easing in the bearish momentum which may support the AUD in the short-term

Last week ๐Ÿ—ž๏ธ Key Takeaways:

AUD/USD

- US President Joe Biden's exit from the presidential race had increased the odds for former President Donald Trump and boosted investors' appetite for riskier assets.

- Experts argued that Bidenโ€™s decision would increase market volatility, though the market reaction had been limited so far.

- Peter Earle, senior economist at the American Institute for Economic Research, stated that investors might seek a safe haven until they could assess Bidenโ€™s replacement's policies.

- Dovish Fed expectations had prompted fresh US Dollar selling.

- Pairs where AUD was the weaker currency, such as EURAUD and GBPAUD, were now in focus.

AUD/NZD

- AUDNZD remained in a tight trading range between 1.1055-1.1155, looking for direction.

- The weakening of the AUD hadnโ€™t impacted the AUDNZD rate in the same way as other major currencies.

AUD/GBP

- The pair had been trending downwards since the 10th of July, dropping over 2%.

- Price action on the AUDGBP 1-hour chart had touched the lower trend line in this bull run.

AUD/EUR

- The European interest rate decision on Thursday evening was held at 4.25% as expected, though the AUD continued to lose ground.

- The AUDEUR rate had also dropped nearly 2% in the last two weeks, showing AUD was weakening against most of the major currencies.

AUD/JPY

- The AUDJPY rate had dropped from the yearly highs towards the 105.00 mark. This had been a support/resistance point over the last few years, needing major news to push back below this level.

- The Moving Average Convergence Divergence (MACD) showed flat red bars, indicating a pause in the previous intensified selling activity.

Things to look out for this week; 

  • Tuesday 30th July

    ๐Ÿ‡ฉ๐Ÿ‡ช German Prelim CPI m/m - EUR

  • Wednesday 24th July

    ๐Ÿ‡บ๐Ÿ‡ธ CB Consumer Confidence - USD 

    ๐Ÿ‡บ๐Ÿ‡ธ JOLTS Job Openings - USD 

    ๐Ÿ‡ฆ๐Ÿ‡บ CPI q/q - AUD

    ๐Ÿ‡ฆ๐Ÿ‡บ CPI y/y - AUD

    ๐Ÿ‡ฆ๐Ÿ‡บ Trimmed Mean CPI q/q - AUD

    ๐Ÿ‡จ๐Ÿ‡ณ Manufacturing PMI - CNY

    ๐Ÿ‡ฏ๐Ÿ‡ต BOJ Policy Rate - JPY

    ๐Ÿ‡ฏ๐Ÿ‡ต Monetary Policy Statement - JPY 

    ๐Ÿ‡ฏ๐Ÿ‡ต BOJ Outlook Report - JPY 

    ๐Ÿ‡ฏ๐Ÿ‡ต BOJ Press Conference - JPY 

    ๐Ÿ‡ช๐Ÿ‡บ Core CPI Flash Estimate y/y - EUR

    ๐Ÿ‡ช๐Ÿ‡บ CPI Flash Estimate y/y - EUR 

    ๐Ÿ‡บ๐Ÿ‡ธ ADP Non-Farm Employment Change - USD 

    ๐Ÿ‡จ๐Ÿ‡ฆ GDP m/m - CAD

    ๐Ÿ‡บ๐Ÿ‡ธ Employment Cost Index q/q - USD 

  • Thursday 1st August

    ๐Ÿ‡บ๐Ÿ‡ธ Pending Home Sales m/m - USD

    ๐Ÿ‡บ๐Ÿ‡ธ Federal Funds Rate - USD 

    ๐Ÿ‡บ๐Ÿ‡ธ FOMC Statement - USD 

    ๐Ÿ‡บ๐Ÿ‡ธ FOMC Press Conference - USD 

    ๐Ÿ‡ฌ๐Ÿ‡ง BOE Monetary Policy Report - GBP

    ๐Ÿ‡ฌ๐Ÿ‡ง Monetary Policy Summary - GBP

    ๐Ÿ‡ฌ๐Ÿ‡ง MPC Official Bank Rate Votes - GBP

    ๐Ÿ‡ฌ๐Ÿ‡ง Official Bank Rate - GBP

    ๐Ÿ‡ฌ๐Ÿ‡ง BOE Gov Bailey Speaks - GBP

    ๐Ÿ‡บ๐Ÿ‡ธ Unemployment Claims - USD 

  • Friday 2nd August

    ๐Ÿ‡บ๐Ÿ‡ธ ISM Manufacturing PMI - USD

    ๐Ÿ‡จ๐Ÿ‡ญ CPI m/m - CHF

    ๐Ÿ‡บ๐Ÿ‡ธ Average Hourly Earnings m/m - USD

    ๐Ÿ‡บ๐Ÿ‡ธ Non-Farm Employment Change - USD

    ๐Ÿ‡บ๐Ÿ‡ธ Unemployment Rate - USD

AUD-USD ๐Ÿ‡บ๐Ÿ‡ธ

Rates continue to drop, declining since mid-month sitting at 0.6553.

AUD-GBP ๐Ÿ‡ฌ๐Ÿ‡ง

Sitting 0.5092 the AUD - GBP has continued itโ€™s decrease since 10 July.

AUD-NZD ๐Ÿ‡ณ๐Ÿ‡ฟ

Rates have kept within a band of 1.1128.

AUD-EUR ๐Ÿ‡ช๐Ÿ‡บ

AUD to the EUR has continued a decline since mid-month at 0.6037.

If youโ€™d like to make a transfer, reach out to Send Payments.

The Expatriate always tries to make sure all information is accurate. However, when reading our website, please always consider our Disclaimer policy.

Ian Cragg

Ian Cragg is the Co-Founder of Send Payment, an Australian-based Money Transfering Company. Send Payments started with a eureka moment in 2018.

Send Payments was born from the need to solve a problem and find an alternative to foreign exchange needs.

Ian brings a wealth of almost twenty years of foreign currency exchange knowledge and experience to THE EXPATRIATE Team.

He is passionate about helping his customers get the best possible deal when exchanging funds across currencies and borders.

His entrepreneurial skills, lateral thinking, and determination set him apart from the pack, and his knowledge of the ever-changing foreign currency market is second to none.

He is a mover and a shaker in the money market and a leader of the fintech and digital banking space, providing world-class digital and mobile payment platforms to private and corporate clients worldwide.

Ian is strategic with his connections and partnerships, collaborating with national and international brands and organisations that would like to diversify and enhance their current product offering.

https://www.sendpayments.com/
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