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On January 8th, European Central Bank Vice President Guindos stated that interest rates are currently at an appropriate level, but warned of "significant uncertainty" brought about by geopolitical events. The policymaker said, "Some of whats happening now was unimaginable just a few quarters ago." Guindos stated, "Business investment could be affected in a complex geopolitical environment, but its currently evolving in a very mild manner." He added, "Despite some improvement in real income, households are keeping savings rates high due to concerns about the future and even fiscal policy." However, he indicated that the "complex geopolitical environment," including concerns about the conflict in Ukraine, has not yet had a substantial impact on the eurozone economy. "Current interest rates are appropriate; the latest data are entirely in line with our forecasts," Guindos said, "overall inflation is at 2%," and "the services inflation we were previously concerned about is slowing."Russia claims that the military declarations of the pro-Ukrainian "Volunteer Union" are becoming increasingly dangerous.On January 8th, Morningstar, in its Q1 2026 outlook report, stated that Asian equities are expected to continue their upward trend in 2026, supported by reasonable valuations. Analysts indicated that while occasional pullbacks are possible, a sustained correction appears unlikely. Global spending on artificial intelligence remains a core driver of technology sector earnings, and valuations for AI-benefiting stocks generally remain attractive. Morningstar anticipates the Federal Reserve will lower the federal funds rate, leading to lower interest rates in Asia, excluding Japan. Japan, on the other hand, may see a gradual increase in interest rates. The report added that geopolitical tensions remain a major risk, and intermittent market volatility is possible.A spokesperson for the Russian Foreign Ministry stated that Western troops and military facilities stationed in Ukraine will be considered legitimate operational targets.A spokesperson for the Russian Foreign Ministry stated that the deployment of Western troops and military facilities in Ukraine would be considered an act of intervention that threatens security.

AUD/USD continues to swing near 0.6860 despite positive Australian employment data

Alina Haynes

Dec 15, 2022 11:35

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The AUD/USD currency pair continues to be affected by the Federal Reserve's monetary policy decision (Fed). The Australian dollar has continued to bounce at 0.6860 despite the Australian Bureau of Statistics' announcement of a significant improvement in Employment Change data. The Australian economy has created 64K new jobs, as opposed to the 19K expected and the 32.2K seen earlier. The unemployment rate has remained unchanged at 3.4%.

 

Previously, 12-month inflation forecasts for Australian consumers declined to 5.2% from 5.7% and 6.0% in the prior edition. Reserve Bank of Australia will be delighted by a considerable decline in inflationary pressures (RBA). Philip Lowe, the RBA's governor, has been tightening monetary policy to reduce the CPI (CPI).

 

Notably, a drop in one-year inflation expectations will not compel the RBA to abandon further interest rate hikes, given that the route to achieving a 2% inflation rate is not yet complete. The Reserve Bank of Australia (RBA) could boost the Official Cash Rate (OCR) by 25 basis points (bps).

 

A change in the Federal Reserve's (Fed) current monetary policy plan caused volatility in the US Dollar. After the Fed announced a lesser rate hike of 50 basis points (bps) and abandoned the 75 basis point rate hike cycle, the US Dollar Index (DXY) plummeted to a six-month low of 103.49. As the fight against inflation will take some time, the Federal Reserve has raised the peak interest rate to 5.1% by the end of CY2023.


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