RBA and 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. 

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? 

Going for gold? Gold has some great seasonals in play right now. 

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.

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