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On January 31st, OCBC strategist Christopher Wong stated that golds price action "confirms the adage a sharp rise is inevitably followed by a sharp fall." He believes that while Warshs nomination as Fed Chair was the trigger, a correction was already inevitable. "Its like one of the excuses the market has been waiting for—to liquidate those parabolic price movements." Precious metals had already paved the way for sharp fluctuations, as soaring prices and volatility put pressure on traders risk models and balance sheets. Goldman Sachs noted in a report that the record wave of call option buying also "mechanically reinforced the upward momentum," as sellers of these options hedged against rising prices by buying more metal.On January 31, Russian Deputy Foreign Minister Grushko stated that the best guarantee for Ukraines security is a concrete guarantee of Russias security, a guarantee that no one in the West has offered. He emphasized, "If we believe that Ukrainian territory will not be used as a bridgehead threatening Russias security, then Ukraines security will also be guaranteed." The Russian Foreign Ministry previously stated that any scenario involving NATO member states deploying troops in Ukraine is absolutely unacceptable to Russia and could lead to a sharp escalation of the situation. The Russian Foreign Ministry also stated that statements from Britain and other European countries regarding the possible deployment of NATO troops in Ukraine are incitement to continue the conflict.January 31st - According to Yahoo Finance, Kevin Warsh, President Trumps nominee for Federal Reserve Chairman, appeared in newly released Epstein case documents released by the US government on Friday. The documents show that Warshs name was listed in the email guest list for the "2010 St. Barths Christmas" event, alongside figures such as Russian oligarch Roman Abramovich; he also attended a dinner hosted by British aristocrat William Astor. This revelation occurred on the same day Warsh was nominated for Fed chairman. His main controversy previously stemmed from his relationship with Republican donor Ronald Lauder, who was accused of influencing Trumps interest in Greenland during his first term and holding business interests there. Warsh may now need to address his relationship with Epstein and his 2010 Christmas trip, and there is also speculation that Trumps nomination is related to their shared social circle.January 31 – With the House of Representatives in recess and unable to consider the appropriations bill, the U.S. federal government entered a technical, partial shutdown at midnight local time on January 31. Analysts point out that although the shutdown is expected to be short-lived, it once again highlights the structural predicament of U.S. fiscal politics. In recent years, temporary funding, short-term extensions, and marginal shutdowns have become the norm in congressional budget battles, with government operations frequently hampered by political disagreements. Currently, the market generally believes that the direct impact of this technical shutdown on financial markets and economic operations is limited, but if subsequent congressional negotiations are again stalled, the risk of a prolonged shutdown and a wider impact cannot be ruled out.January 31st - The US government officially began a partial shutdown early this morning local time. This followed the Senates passage of a spending bill to fund most federal government departments, which was then submitted to the House of Representatives for consideration. However, because House members were not in Washington and would not return until Monday (February 2nd), the Senate vote could not prevent a partial government shutdown.

AUD/JPY struggles to justify robust Australian Retail Sales, as yields approach 95.00

Daniel Rogers

Aug 29, 2022 15:06

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Despite Australia's July Retail Sales increase, which was released during Monday's Asian session, AUD/JPY continues to fall from a multi-day high. As the cross-currency pair approaches 95.00, it halts its drop from the daily high.

 

In spite of this, Australia's seasonally adjusted Retail Sales grew 1.3% month-over-month in July, above 0.3% market forecasts and 0.2% previously.

 

Notably, despite the recent increase, the cross-currency pair, also known as the risk barometer, remains only marginally bid, as the market fears an economic slowdown in reaction to aggressive rate hikes by the major central banks. This disregards the recent seven basis point (bps) increase in US Treasury yields to 3.106%.

 

Haruhiko Kuroda, governor of the Bank of Japan (BOJ), may have made similar statements over the weekend. Reuters reported that Bank of Japan (BOJ) Governor Haruhiko Kuroda remarked over the weekend at the Kansas City Fed's annual conference in Jackson Hole Symposium, Wyoming that the central bank will likely continue its accommodating policy in Japan.

 

The underlying cause may be tied to the safe-haven character of the Japanese yen, as well as earlier dovish comments by the Reserve Bank of Australia (RBA) and the most recent US-China confrontation. The Japanese government's willingness to increase stimulus could exert additional negative pressure on the AUD/JPY exchange rate.

 

In order to assess the short-term movements of the cross-currency pair, AUD/JPY traders should await unequivocal signals from the monetary policy authorities of Australia and Japan, in addition to keeping an eye on the recently heightened recession concerns amid rate hike fears.

 

Triple peaks near 95.75-80 tempt AUD/JPY bears, but a convincing break of a three-week-old support line, which was at 94.45 at the time of writing, is required for a bearish tilt.


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