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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.January 31st - According to the UKs Daily Telegraph, British Prime Minister Keir Starmer responded to US President Trumps remarks on Sino-British cooperation in Shanghai on the 30th, stating that ignoring China would be "unwise." "It would be unwise to simply say we should ignore it. You know, French President Macron has already visited (China) and had exchanges, and German Chancellor Merz is also coming to exchange views," Starmer said. "It would not be in our national interest for Britain to be the only country refusing to engage (with China)." Starmer added, "In the past 24 hours, the opening of market access has been warmly welcomed by the business community. They have reported a change in the atmosphere and a significant increase in willingness to cooperate. This is good for our economy."On January 31st, China Merchants Securities, in its latest research report, also pointed out that its team recently surveyed liquor distribution channels in Henan, Anhui, Sichuan, and other regions. Overall demand is still declining (double-digit decline), but this is in line with previous expectations. Looking at different scenarios, business banquets are mainly small-scale events, mid-to-high-end dining remains sluggish, and gift-giving demand has partially rebounded. There is a clear differentiation among brands, with Moutai showing excellent sales performance due to pre-emptive stockpiling for the Spring Festival, while other brands are under pressure.On January 31, Michal Baltek, Vice Chairman of the Defense and Security Committee of the Slovak Parliament, stated in an interview with a reporter from China Central Television that the dispute surrounding Greenland is no longer merely a territorial or security issue, but reflects deep-seated challenges to US-EU relations, European strategic autonomy, and the international rules-based system. Baltek also stated that the USs use of trade tools to exert political pressure not only violates the spirit of international law but also undermines the rules-based international trading system.

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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