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The Aussie could grow to 0.76 by the year-end

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What's new?

Australia expanded faster than expected last quarter. Also as an exporter of wheat, it could benefit from higher prices from the war in Ukraine, it is also a major exporter of Iron, and the potential growth is huge as China, the main importer started to ease restrictions after two months of lockdowns. The rally in USD loses steam as rate hike expectations from central banks are well priced and the resurgence of risk-taking trades is ramping up.

The ECB dilemma is getting difficult

The market expects a 50 bps hike in the September meeting however, pressure is mounting on ECB leaders to keep the monetary pace accommodative. But the partial ban on imports of Russian oil, an essential step in forcing Vladimir Putin’s regime to end its war on Ukraine, make the ECB decision more complicated. New restrictions on energy imports will create another supply-side shock, keeping E.U.’s prices high and adding to the risk of stagflation.

What’s in the pipe?

  • Reserve Bank of Australia policy decision Tuesday
  • World Bank’s “Global Economic Prospects” report Tuesday
  • Reserve Bank of India rate decision Wednesday
  • OECD Economic Outlook, a twice-yearly analysis of major global economic trends and prospects for the next two years. Wednesday
  • European Central Bank rate decision, Christine Lagarde briefing, Thursday
  • China trade, new yuan loans, money supply, aggregate financing. Thursday
  • US CPI, University of Michigan consumer sentiment Friday
  • China CPI, PPI Friday

FX rates

USD/JPY @ 130.73 - Bullish trend

EUR/USD @ 1.0731 - Bearish trend

GBP/USD @ 1.2501 - Bearish trend

AUD/USD @ 0.7203 - Bearish trend

USD/CNH @ 6.6585 - Bullish trend

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