FX News

Key FX Points This Week.

FX Update:

Many equity investors have been in denial of late thinking the recent rally recovery will continue back to the old highs of mid-August. So far as we head into the back end of the year it hasn’t happened. With the Federal Reserve continuing to raise rates- this morning another 75 points to 3.25% it’s tough to be overly hawkish on equities. In efforts to stop rising inflation the Fed forecast more sizable hikes to come, the wash up- the big boys are preferring to buy Bonds ahead of stocks. The S&P index is down more than 10% in the past month and 21% off its 2022 high with other indices also struggling. You can only steer the boat towards the storm for so long before you need to batten down the hatches.

Key Points:

The US Federal Reserve raised rates to 3.25% yesterday with forecasts of a continued aggressive stance with the Fed indicating they will hike to 4.4% by next year
The Bank of England (BoE) raised their interest rate to 2.25% this morning, the highest level in 14 years
Putin has mobilised more troops into Ukraine
Governor Lowe says the RBA is getting closer to “neutral” monetary policy, with the economy weak they will not have to hike as much- perhaps only 25 points at their October 4th meeting
Westpac Consumer Confidence rose in the September quarter 87.6, up from the June lows but it’s still pessimistic
The Bank of Japan (BoJ) kept its ultra-easy policy yesterday with no change to their cash rate of minus 0.1%. Japanese consumer inflation 3% in August above the bank’s 2.0% target. The Japanese Yen fell briefly to a 24 year low against the greenback highlighting the steep divergence between the US and Japan economies
Chinese GDP forecast for 2023 has been slashed from 5.3% to 4.5%
The struggling Japanese Yen (JPY) is the strongest currency this week while the New Zealand Dollar (NZD) is in long way last

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