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US President Trump: Received a call from Nvidia CEO Jensen Huang about San Francisco.On October 24th, The Guardian reported that sources said British Chancellor of the Exchequer Reeves is considering raising income tax in next months budget to help narrow the multi-billion pound fiscal deficit. Reports indicate that Reeves, facing a fiscal gap exceeding £30 billion, is actively discussing whether to break a key Labour Party campaign promise of not raising income tax. Government officials are considering options such as increasing the basic income tax rate or adjusting the tax threshold. Reeves hopes to reduce the deficit by the end of the decade by balancing day-to-day spending with tax revenue. The current budget deficit reached £71.8 billion between April and September, a 17% year-on-year increase.On October 24, the European Union decided to postpone until December whether to use frozen Russian central bank assets to aid Ukraine after Belgium requested more guarantees to ensure it would not be liable for risks associated with the 140 billion euro loan. People familiar with the matter said that EU leaders asked the European Commission to draft options for them to consider at the next summit, with the goal of reaching a final agreement before the end of the year.On October 24, the White House stated that President Trump is increasingly disappointed with Russias inadequate peacemaking efforts and hopes to see action, not just talk, to end the conflict. The White House also stated that a meeting with Russian President Vladimir Putin is not completely impossible. White House Press Secretary Levitt said at a press conference, "I think the president and the entire administration hope to have another meeting someday, but we want to ensure that this meeting can produce tangible, positive results."On October 24th, Russian President Vladimir Putin responded to US President Trumps comments regarding the Budapest summit, stating that the US is currently leaning toward postponing the summit rather than canceling it. "Based on the latest US statement, I understand that the US president has decided to cancel or postpone the meeting. Judging from his statement, a postponement is more likely," Putin told reporters. He emphasized that hastily holding the Budapest summit without adequate preparation would be a major mistake. "Such high-level meetings must be carefully prepared. It would be a mistake for both me and the US president to treat the summit lightly or fail to achieve the expected results."

AUD/USD crosses 0.6900 amid market concern ahead of an RBA rate hike

Alina Haynes

Jul 05, 2022 11:56

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The AUD/USD currency pair continues its recovery from the week's start, trading at approximately 0.6875 on Tuesday during the Asian session. Market caution and a weakened US dollar may be to blame for the quotation's improved performance. However, bulls appear cautious previous to the Reserve Bank of Australia's (RBA) Interest Rate Decision.

 

The US Dollar Index (DXY) is struggling to hold onto its two-day gain to 105.00 as buyers retreat from a two-week peak. In reaction to rising Treasury rates, it appears that bulls in the dollar have risen in price. Notable is the fact that benchmark 10-year Treasury bond rates retain the earlier U-turn from a one-month low at roughly 2.92 percent, up three basis points (bps) from Friday's closing.

 

The holiday in the US did not give much relief for bond bears, but higher printing of German Bunds and chatter about the US debate on eliminating Trump-era tariffs on China looked to underpin US Treasury prices. The 10-year German Bund yield rose to 1.32 percent, up at least 10 basis points from its previous level.

 

The AiG Performance of Construction Index for June in Australia fell to 46.2, below the previous level of 50.4, while the S&P global Composite PMI and Services PMI confirmed the initial June prediction of 52.6%.

 

Between now and RBA day, investors will be put to the test by concerns about the economy and China's credit situation, as well as Russian claims to full power in Lysychansk.

 

The US Factory Orders for May, expected at 0.5 percent versus 0.3 percent, might be of interest to AUD/USD traders in the future, but traders should pay close attention to risk triggers and pre-NFP sentiments, as well as the markets' reaction to the recently increased bond rates.

 

Noting that the RBA's 0.50 percent rate hike is already a certainty and looks to have been priced in, Tuesday's RBA Rate Statement will likely give extra momentum. The AUD/USD may be able to extend its recent surge for the time being if the policy announcement signals further rate hikes.


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