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RSM Chief Economist Joseph Brusueras: Warsh delivered the right hawkish signals at the press conference and attempted to reinforce the Fed’s credibility in restoring price stability, while also enhancing his own credibility.U.S. stocks continued to decline after the Walsh press conference, with the S&P 500 falling 1%, its biggest drop since July 29, the Dow Jones Industrial Average down 1.65%, and the Nasdaq Composite down 0.6%.On September 17th, Federal Reserve Chairman Warsh declined to answer questions at a press conference regarding his interactions with US President Trump. Trump has been calling for lower interest rates in recent months. Warsh stated, "I have no comment on my discussions with the president." White House Council of Economic Advisers Chairman Christopher Phelan said on Tuesday that raising interest rates would be a "mistake."On September 17th, Federal Reserve Chairman Warsh stated that he would not disclose details of future interest rate decisions by the Federal Open Market Committee (FOMC). He said, "I am not responsible for providing forward guidance. Our decision today (to raise interest rates) is a carefully considered, serious, and responsible one. We have been preparing for and thinking about this decision for the past 110 or 120 days." Warsh also stated that this decision was not market-driven. He said, "Our decision today is based on our assessment of the current situation, our judgment of the employment trend, and our assessment of the strength of the economy. Sometimes, the market tries to anticipate our decisions. I watch market prices to see what information the market is sending. But todays decision is our own."On September 17th, Warsh stated that while the Federal Reserve cannot prevent price shocks in commodities such as oil on its own, the central bank can use policy tools to prevent further spread of inflationary pressures. Warsh said, "We cannot influence the price of any single commodity, such as oil or groceries." However, he pointed out, "We can and will ensure that any changes in relative prices do not spread further, and do not have second- or third-order effects on the economy. Thats our responsibility, and thats what were doing." Warsh made these remarks as U.S. diesel prices hit a record high due to the Iran war.

Despite a Mixed China PMI and a Strengthening USD, AUD/USD Remains below 0.7200

Daniel Rogers

May 31, 2022 14:45

 截屏2022-05-31 上午11.41.36.png

 

AUD/USD struggles to rebound from its intraday low of 0.7160, ending a three-day climb above the monthly high, as Australian traders review Chinese activity data and domestic housing data on Tuesday morning. In doing so, the Australian dollar pair splits a three-day uptrend and decreases daily from its highest levels since the beginning of May.

 

China's official activity statistics showed a dip in May, with the headline NBS Manufacturing PMI meeting market forecasts at 49.6 compared to 47.4 earlier, and the Non-Manufacturing PMI falling to 47.8 below the market's 50.7 forecast.

 

In addition, Australia's Building Permits declined by -2.4 percent in April, compared to the anticipated 2.0 percent increase and previous readings of -18.5 percent.

 

Despite bad data from Australia's largest client and lower housing statistics at home, AUD/USD traders can maintain recent gains due to the market's mixed attitude and the US dollar's recovery.

 

As bond buyers take a vacation in the early hours of Tuesday, market excitement wanes, supporting a slide in riskier assets such as stocks and commodities. In addition, developments in Europe and consolidation at the conclusion of the month undermined the earlier risk-on mentality. Futures for the S&P 500 retrace from a three-week high that was reached the previous day in order to retest the 4,155 level. In addition, 10-year US Treasury yields have risen by 8.5 basis points (bps) to 2.835% as of press time.

 

Given the US recovery and a shift in market sentiment, as well as bad data from China and Australia, it is anticipated that the AUD/USD exchange rate will continue to decrease. Nevertheless, risk catalysts and secondary US activity statistics for the month of May must be attentively examined.

Technical Evaluation

A AUD/USD decline remains elusive as of press time till the pair holds above a 13-day-old support line near 0.7135. To satisfy buyers, though, recovery moves must rebuild the monthly high near 0.7270 by the latest.


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