RBA & BoE Follow the Fed
The visit by US House Speaker Nancy Pelosi to Taiwan spooked markets this week as fears circulated around a potential flare-up between China and the US. However, most analysts saw this as posturing, and calm quickly returned to stocks. The Reserve Bank of Australia followed the Fed in moving to a meeting-by-meeting basis and the Bank of England did too stressing it was not on a ‘pre-set path’. Next week expect US Core inflation to be a key focus. The best opportunity will likely come from any indication that peak inflation has been and gone, so this is a ‘don’t miss’ economic data release.
Other key events from the past week
- * AUD: Interest Rate Decision, Aug 02: The RBA moved to a meeting-by-meeting basis this week as they want to assess incoming data before guaranteeing a commitment to further rate hikes. You can read more on the details here.
- * GBP: Interest Rate Decision, Aug 04: The Bank of England gave a dour out-look for growth in the UK sending the GBP lower. The 2023 recession projections were brought forward to Q4 2022 and are now expected to last for 5 quarters.
- * Geopolitics: US, China, & Taiwan Aug 02: US House Speaker officially concluded her visitor to Taiwan on Wednesday this week in a move that had markets jittery on Tuesday. However, geopolitics tends to have a short-lived reaction in markets. See here for a historical assessment.
Key events for the coming week
- * AUD: Consumer confidence, Aug 09: After the RBA’s more dovish decision last week will the Australian consumer show signs of stress over rising inflation and higher interest rates? See the RBA’s last decision here.
- * Going for gold? Gold has some great seasonals in play right now. See here.
- * USD: Core Inflation, Aug 10: Expectations are US Core inflation will fall to 8.9% from 9.1% y/y. However, if inflation remains high & prints above 9% the USD could find bids if investors think the Fed will still hike rates aggressively.
HYCM clients can access the Seasonax product in order to analyse over 25,000 currency pairs, indices, commodities, as well as individual stocks. Please contact your account manager for a free trial. Certain products & services mentioned herein may or may not be available to all clients depending on which HYCM Capital Markets Group entity their trading account(s) adheres to.
About: HYCM is the global brand name of HYCM Capital Markets (UK) Limited, HYCM (Europe) Ltd, HYCM Capital Markets (DIFC) Ltd and HYCM Limited, all individual entities under HYCM Capital Markets Group, a global corporation operating in Asia, Europe, and the Middle East.
High-Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.