Changing of The Guards

US Jobs Report

The US added 180K new jobs last month versus the expected 170K. But was balanced out by the jump in the unemployment rate that came at 3.8% versus 3.5% prior and expected. With higher borrowing costs, less availability of credit facility and student loan repayments all set to weigh on the US Macro picture, unemployment, according to ING, is set to slide further.

Dollar Outlook

Swaps on Fed Funds Rate seen pricing in a peak on US interest rates, effectively taking a hike announcement at FOMC this month out of the picture and a cut as early as March next year. This is in-line with what Goldman Sachs had penciled in about three weeks ago if my memory serves me right. The only thing that might change this according to the Wall Street Breakfast is a horrific US PMI or CPI reading that’s completely out of whack to the topside, I assume, due to (which we are seeing very clear signs of) higher energy prices.

Global Demand Picture

The global demand picture that was fueled by pandemic stimulus spending is seen on its last legs. The war in Ukraine sent energy & food prices skyrocketing as international supply chains were disrupted as economies were fully reopening from pandemic closures. Global Central Banks took to raising rates globally to combat inflation and for the most part have done a pretty solid job. But risks to the upside still prevail when it comes to energy prices and with that – fear of it seeping into consumer prices and inflation expectations. China is still reeling from the pandemic and the effective collapse of its real estate market. Up until now, key data has generally missed expectations to the downside. But its recent relaxation of measures to stoke demand might just be what it needs to stem the bleeding. A wait and see game in the arena of global macroeconomics. Which brings us to the next item on the docket - the RBA Rate Announcement today.

A Changing of Guard

The RBA is expected to hold rates at an 11-year high unchanged at RBA Governor Philip Lowe’s Final announcement today (12.30PM MST) as data shows evidence of the RBA’s hiking campaign has managed to tame inflation without destroying demand. Economists however see the RBA Governor make the case to hike and maintain a tightening bias to ensure the current path remains effective. The Aussie currently trades close to a multi-month support trend line and have been under pressure for multiple weeks as markets priced in further hikes from the US Federal Reserve.

That is it from me today, to know more feel free to get in touch via email at [email protected]. Feel free to try out our demo account via clicking on the link below. This was - Your Morning Reed.

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Sources: ING, Wall Street Breakfast, The Star, Bloomberg, Reuters, Vantage Markets

Disclaimer: This piece is for information purposes only and does not constitute advice nor solicitation. CFD trading carries with it inherent risks to your capital.