Monthly Economic Outlook: Why has the economy contracted? [Video]
![Monthly Economic Outlook: Why has the economy contracted? [Video]](https://editorial.fxstreet.com/images/Macroeconomics/CentralBanks/FED/the-federal-reserve-building-in-washington-dc-usa-67160227.jpg)
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Wells Fargo Research Team
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AUD/USD rebounds from its lowest level since April 13, touched during the Asian session on Monday, as the US Dollar pauses following Friday's upbeat US NFP-led blowout rally to a two-month high. However, persistent geopolitical uncertainties, along with surging bets on Fed rate hikes, might continue to act as a tailwind for the USD. Furthermore, diminishing odds of a near-term RBA rate hike should cap gains for the Aussie.
USD/JPY touches a fresh high since late April following an Asian session dip, though intervention fears limit losses for the Japanese Yen (JPY) and cap the upside. This counters Japan’s revised GDP print, which confirmed that the economy lost momentum in the first quarter. Meanwhile, Friday's upbeat US NFP report lifted bets of a Fed rate hike and favors the US Dollar bulls, backing the case for a further move higher for the currency pair.
Gold attracts some buyers at the start of a new week and reverses part of Friday's decline to its lowest since March 24, around the $4,300 mark. The US Dollar pauses after Friday’s upbeat US NFP-led blowout rally to a two-month high and supports the bullion. However, a surge in bets on a Fed rate hike, along with geopolitical uncertainties, favors USD bulls. The backs the case for the emergence of fresh sellers around the precious metal at higher levels.
The countdown to the biggest event of the year so far, the first Fed meeting under Chair Warsh on June 17, has officially commenced. Next week’s key events could serve as the best appetizer for Warsh’s first press conference, although market participants will probably be distracted by developments elsewhere.
Fed Chair Warsh’s first meeting approaches as key US inflation data could reshape expectations. Oil prices remain elevated as US-Iran talks continue; tariffs also return to the spotlight. ECB is expected to hike; will it be a one-off move or is July live?
More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.
