Articles
AUD/USD hovers around 0.6650 due to heightened inflation concerns
398531 June 27, 2024 10:33 FXStreet Market News
- AUD/USD receives support as hot inflation data fuel speculation that the RBA may raise rates in August.
- AustraliaÂ’s Consumer Inflation Expectations rose to 4.4% in June from May’s 4.1%, indicating ongoing cost pressures.
- US GDP Annualized (Q1) is expected to increase 1.4% from the previous growth of 1.3%.
AUD/USD remains stable after gaining in the previous session, trading around 0.6650 during the Asian hours on Thursday. The Australian Dollar (AUD) is supported against the US Dollar (USD) due to heightened inflation concerns, fueling speculation that the Reserve Bank of Australia (RBA) might raise interest rates again in August.
On Thursday, AustraliaÂ’s Consumer Inflation Expectations rose to 4.4% in June from May’s 4.1%, indicating ongoing cost pressures with inflation still above the RBA’s target range of 2%-3% due to persistently high service costs.
AustraliaÂ’s monthly Consumer Price Index (CPI) jumped to 4.0% in the year to May, up from the 3.6% increase recorded in April, according to data published by the Australian Bureau of Statistics (ABS) on Wednesday. This increase exceeded the market forecast, which predicted a 3.8% growth for the reported period.
RBA Assistant Governor Christopher Kent stated on Wednesday that recent data emphasize the necessity of remaining vigilant about potential inflation increases. Kent noted that current policies are contributing to slower demand growth and lower inflation. He also mentioned that no options regarding future interest rate adjustments are being excluded, per Bloomberg.
On the US DollarÂ’s (USD) side, traders are anticipating the release of the US Gross Domestic Product Annualized (Q1) data on Thursday, which is expected to show a slight increase of 1.4% from the previous growth of 1.3%. On Friday, the Core PCE Price Index inflation is projected to decrease year-over-year to 2.6% from the previous 2.8%. Market participants are hoping that signs of easing inflation will encourage the Federal Reserve (Fed) to consider rate cuts sooner rather than later.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
JapanÂ’s Hayashi: Will take appropriate steps on excessive FX moves
398529 June 27, 2024 10:09 FXStreet Market News
Japan’s Chief Cabinet Secretary Hayashi echoed comments from the country’s Finance Minister Shunich Suzuki on Wednesday, noting that he “will take appropriate steps on excessive fx moves.“
Additional quotes
Won’t comment on forex levels and potential FX intervention.
Important for currencies to move in stable manner reflecting fundamentals.
Rapid FX moves undesirable.
Market reaction
Following these comments, USD/JPY is losing 0.23% on the day to trade near 160.40, extending its pullback from near four-decade highs of 160.87.
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| Â | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| USD | Â | -0.10% | -0.06% | -0.26% | -0.04% | -0.10% | 0.03% | -0.08% |
| EUR | 0.10% | Â | 0.03% | -0.15% | 0.04% | 0.00% | 0.09% | 0.00% |
| GBP | 0.06% | -0.03% | Â | -0.18% | 0.01% | -0.02% | 0.10% | -0.01% |
| JPY | 0.26% | 0.15% | 0.18% | Â | 0.20% | 0.14% | 0.24% | 0.18% |
| CAD | 0.04% | -0.04% | -0.01% | -0.20% | Â | -0.07% | 0.06% | -0.04% |
| AUD | 0.10% | -0.00% | 0.02% | -0.14% | 0.07% | Â | 0.13% | 0.00% |
| NZD | -0.03% | -0.09% | -0.10% | -0.24% | -0.06% | -0.13% | Â | -0.10% |
| CHF | 0.08% | -0.01% | 0.01% | -0.18% | 0.04% | 0.00% | 0.10% | Â |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
JapanÂ’s Suzuki: Will take necessary actions on FX
398527 June 27, 2024 10:02 FXStreet Market News
Japanese Finance Minister Shunichi Suzuki said on Wednesday that he “will take necessary actions on FX. “
Additional comments
Won’t comment on forex levels.
FX stability is desirable.
Watching FX moves with high sense of urgency.
Deeply concerned about fx impact on economy.
Rapid and one-sided moves undesirable.
His comments come as USD/JPY reached a fresh 38-year peak on Wednesday at 160.87. At the time of writing, the pair is losing 0.21% on the day to trade below 160.50.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is AustraliaÂ’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is AustraliaÂ’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Tokyo is sleeping and the USD/JPY market is pushing
398523 June 27, 2024 09:21 Forexlive Latest News Market News
Japanese chief currency diplomat Kanda dropped all the warnings just before Tokyo went to bed but there was no intervention. It’s now nearly 1 am in Tokyo and the market is sensing that it’s safe for a least a few hours.
I imagine there’s some element of short-covering here as those expecting a line in the sand at 160.00 bow out. That said, two months ago the MoF let the pair run one way from 158.00 to 160.20 before knocking the pair down 800 pips. They might be trying to pull in spec longs again before blowing them out.
USDJPY 10 minutes
I admire anyone willing to do this dance with Japan but it’s a real game of chicken. Keep an eye out for the US 5-year auction at 1 pm ET. Yields are 6-7 bps higher across the curve at the moment and pressing. A soft/strong auction would have knock-ons for USD/JPY, though I wouldn’t expect more than 20 pips under any circumstance.
Full Article
PBOC sets USD/CNY reference rate at 7.1270 vs. 7.1248 previous
398522 June 27, 2024 09:21 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Full Article
Heads up on Fetch.ai’s token merger with OCEAN and AGIX
398520 June 27, 2024 09:09 FXStreet Market News
- ASI alliance will begin on July 1 and involve two key phases for the merger.
- Phase 1 will see OCEAN and AGIX being merged into FET.
- Phase 2 will include community onboarding and deploying the new ASI token across several chains.
Fetch.ai (FET) announced in an X post on Wednesday that it will begin the ASI token merger with Ocean Protocol (OCEAN) and SingularityNET (AGIX) on July 1. The process, which has two phases, will conclude the long-awaited token integration across the three Artificial Intelligence (AI) protocols.
FET outlines ASI merger process
FET disclosed in an X post on Wednesday that its Artificial Super Intelligence (ASI) alliance with Ocean Protocol and SingularityNET is slated for July 1 and will comprise two phases.
Phase 1 will involve merging SingularityNET’s AGIX and Ocean protocol’s OCEAN tokens into Fetch.ai’s FET token.Â
This merge will precede the transition to ASI across crypto exchanges like Binance and crypto data aggregators such as CoinMarketCap and CoinGecko.
The process will involve delisting AGIX and OCEAN tokens from exchanges, followed by a rebrand of their symbols and names. All deposits in both tokens will also cease, with only FET deposits remaining unaffected. This process will mainly see the onboarding of exchanges and data aggregators during the rebranding process.
The conversion rates are 1 FET = 1 ASI, 1 OCEAN = 0.433226 ASI, and 1 AGIX = 0.433350 ASI.
Phase 2 will happen later, around mid-July, and will focus on community onboarding and deploying ASI across multiple chains. While all the Mainnet tokens will automatically be converted and deployed as ASI, new migration contracts will be released to users who have either locked their tokens or staked them in various other platforms.
These migration contracts will serve a long time to ensure everyone who holds any of the tokens can manually convert them to ASI.
Furthermore, several crypto community members anticipate a rally in AI tokens, including the upcoming ASI token, as the alliance represents a major feat for crypto and AI.
Full Article