AUD/USD slides over flight to safety
The Australian dollar slips as commodities fall amid recession fears. The latest CPI showed annual inflation easing slightly in August, which may convince policymakers that they are on the right track. However, another 50bp interest rate hike by the RBA this week could be sidelined by the market’s pessimism. Nervous traders may continue to hoard the safe-haven dollar amid selling of risk assets. Prolonged weakness in the Chinese yuan, as Australia’s biggest trading partner undergoes an economic slowdown could weigh on commodity prices and the Aussie proxy. 0.6260 is the next support and 0.6660 the first resistance ahead.
NZD/USD falls over risk aversion
The New Zealand dollar weakens as the risk-off mode prevails. The RBNZ is set to deliver its eighth straight rate hike with another 50bps. Governor Adrian Orr said the tightening cycle is ‘well advanced’ but not over yet. Low unemployment rate and high inflation would still give the central bank leeway to push for tighter conditions. The market expects a further 50bp rate raise in November, taking the official cash rate to 4%. Though pronounced weakness in the kiwi may exacerbate inflation, which may turn into a downbeat spiral. The pair may find a short relief over March 2020’s low (0.5500). 0.5950 is the resistance in case of a bounce.
XAU/USD slumps as dollar bounces higher
Bullion struggles as the dollar index climbs to a fresh two-decade high. Greater rate hike expectations may maintain a firm support to the greenback at the expense of gold. Renewed hawkish calls from Fed officials make the peak in US interest rates of anyone’s guess. The previously much-speculated 4% seems to be outdated. Policymakers are betting on the low unemployment rate to keep the monetary policy restrictive. A median estimate of all 19 Fed bankers shows interest rates rising to 4.4% by the end of this year. The precious metal would be heading to April 2020’s low at 1570 and 1700 is the closest resistance.
S&P 500 tumbles over global hard landing
The S&P 500 falls as Fed officials remain vocal about tighter monetary policy. The market is bracing for another 75bp hike at the FOMC in November. There are definitely few good headlines to soothe investors. Property crisis in China and escalation on the Russia-Ukraine front only amplify worries of a concerted global hard landing. Resilience in the US job market may not be investors’ best friend but rather convince the Fed to carry on. With mega caps like Amazon and Apple under pressure, equities may bear the brunt of widespread risk aversion. The index is heading to a two-year low at 3280 and 3800 is a fresh resistance.
This market forecast is for general information only. It is not an investment advice or a solution to buy or sell securities.
Authors' opinions do not represent the ones of Orbex and its associates. Terms and Conditions and the Privacy Policy apply.
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. There is a possibility that you may sustain a loss of some or all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
AUD/USD stays directed toward 0.6500 as RBA's Bullock speaks
AUD/USD is extending losses toward 0.6500 in Asian trading on Tuesday. The Aussie Dollar remains offered after the Reserve Bank of Australia extended the pause. Markets digest the less hawkish policy statement while Governor Bullock's press conference gets underway.
USD/JPY recaptures 150.00 after the expected BoJ rate hike
USD/JPY extends gains to regain 150.00, as the Japanese Yen stays vulnerable amid a classic 'sell the fact' trading on the hawkish BoJ decision. The BoJ lifted the interest rate by 10 basis points (bps) from -0.1% to 0% for the first time since 2007 and abandoned the YCC framework.
Gold price hangs near one-week low, looks to Fed decision on Wednesday for fresh impetus
Gold price struggles to capitalize on the previous day's bounce from the $2,145 region and oscillates in a range during the Asian session on Tuesday. Hawkish Fed expectations, elevated US bond yields and a bullish USD cap the upside.
Bitcoin price shows weakness, but new BTC whales have created solid support at $56,400
Bitcoin price downside momentum continues to gain strength, giving sidelined and late bulls a chance to buy the dip. The market remains focussed on the oncoming halving, expected to kick off the next bull cycle.
Lots of tension ahead of this week's Fed decision
Last week, we got a strong round of US economic data accompanied by hotter US inflation reads. The takeaway of course is that there might be a lot more pressure on the Fed to be looking to scale back its rate cut outlook at this week’s meeting.