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April 4th - The first meeting of the China-Canada Financial Working Group was held in Beijing on April 3rd. The meeting was co-chaired by Pan Gongsheng, Governor of the Peoples Bank of China, and François-Philippe Champagne, Minister of Finance of Canada. High-level representatives from the Peoples Bank of China, the State Financial Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and financial regulatory authorities from Canada, including the Ministry of Finance, the Bank of Canada, and the Financial Institutions Authority of Canada, attended the meeting. During the meeting, the financial regulatory authorities from both sides exchanged views on global macroeconomic conditions, monetary policy, financial regulation, financial market development, global financial governance, and addressing increasing uncertainty. Both sides agreed that strengthening communication between regulatory agencies and financial institutions would help create a stable and predictable business environment and promote bilateral trade and economic exchanges. Both sides recognized the important role of the financial sector in promoting economic growth and driving bilateral trade and investment, and believed that strengthening communication between their respective financial regulatory authorities was of positive significance.April 4th - According to a letter to the European Commission seen by Reuters on Saturday, finance ministers from five EU member states have called for taxes to be levied on the "excessive profits" energy companies have made due to rising fuel prices caused by the war with Iran. The finance ministers of Germany, Italy, Spain, Portugal, and Austria made this appeal in a joint letter, stating that this move would send a signal that "we are united and capable of taking action." It would also send a clear message that those who profit from the war must bear their due responsibility for alleviating the burden on ordinary people.According to Reuters, the finance ministers of Germany, Italy, Portugal, Austria, and Spain have called for a windfall profits tax on energy companies.April 4th - According to CNN, as the Middle East conflict enters its second month, the oil shortage crisis risks escalating into a worse situation – shortages of almost everything. The conflict has severely restricted oil and gas transport through the Strait of Hormuz, reducing global supply by about one-fifth. This disruption has not only driven up fuel prices but also squeezed the supply of petrochemical products needed to manufacture everyday items such as shoes, clothing, and plastic bags. As prices for materials like plastics, rubber, and polyester rise, this pressure is spreading to every corner of the consumer market. Asia is currently the most affected, home to more than half of the worlds manufacturing and heavily reliant on imported oil and other commodities. Dan Martin, co-head of business intelligence at Deloitte Touche Tohmatsu, stated that this will very, very quickly impact all goods, such as beer, noodles, potato chips, toys, and cosmetics, because plastic bottle caps, shipping pallets, snack bags, and containers are becoming increasingly difficult to procure. Martin added that adhesives used in footwear and furniture, industrial lubricants for machinery, and solvents used in paints and cleaning processes also rely heavily on petroleum-derived products.On April 4th, the Israel Defense Forces (IDF) issued a statement saying that on April 3rd, the IDF conducted airstrikes on multiple targets in Tehran, the Iranian capital. The statement said the strikes targeted several key Iranian infrastructure sites, including an Iranian Islamic Revolutionary Guard Corps (IRGC) air defense facility storing missiles used to engage aerial targets. The statement also said the IDF attacked a military base responsible for protecting Iranian weapons research and development facilities. Additionally, it struck a ballistic missile storage site and several weapons production and research facilities. Iran has not yet responded to the attacks.

AUD/USD bulls retain dominance over 0.68 prior of RBA's Lowe and US NFP data

Daniel Rogers

Dec 02, 2022 15:42

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The AUD/USD pair oscillates near 0.6800 in the early Asian session on Friday, a day after reclaiming the 11-week high. Despite this, the AUD/USD pair has climbed for three consecutive days as a result of widespread US Dollar weakness and market optimism on China's Covid situation. Weak US statistics could contribute to the rally's vigor.

 

At the time of publication, the US Dollar Index (DXY) was under pressure near 104.70, its lowest level in four months, as the dovish stance of Federal Reserve (Fed) members and the pessimistic comments of US Treasury Secretary Janet Yellen increased expectations of easy rate hikes.

 

Michelle Bowman, governor of the Federal Reserve (Fed), recently stated that we should control the rate of price increases. Prior to him, Fed Governor Jerome Powell and US Treasury Secretary Yellen both alluded to a halt in rate hikes and advocated for a soft landing. Michael Barr, vice chairman of supervision, adding, "At the next meeting, we may reduce the rate of rate increases." Notably, recent remarks by John Williams of the New York Fed appeared to test US Dollar bears as policymakers underlined that the Federal Reserve still has a ways to go with rate hikes.

 

The predominance of bad US statistics, in addition to Fed-speak, weighed heavily on the US Dollar. However, the US Core Personal Consumption Expenses (PCE) Price Index, the Federal Reserve's preferred inflation gauge, matched market forecasts of 5.0% on a year-over-year basis, but dropped to 0.2% on a month-over-month basis, compared to 0.3% that was anticipated. In addition, the US ISM Manufacturing PMI for November dropped to 49.0 from the expected 49.7 and the previous 50.2.

 

In addition, the three consecutive days of a decline in the number of daily Covid infections in China from the record high allowed regulators to hint at the "next step" in combating the virus while announcing a number of easings of activity-control measures. Given the close ties between Australia and China, AUD/USD buyers typically celebrate positive developments in Beijing.

 

Domestic Private Capital Expenditures in Australia for the third quarter (Q3) declined to -0.6%, compared to the predicted 1.5% and the prior -0.3%. Moreover, poor November readings for Australia's AiG Performance of Mfg Index and S&P Global Manufacturing PMI appeared to have weighed on AUD/USD bulls at the multi-day high.

 

Prior to the speech of Reserve Bank of Australia (RBA) Governor Philip Lowe, it appears that the mixed performance of Wall Street and the multi-month low US Treasury yields weighed on AUD/USD bulls. During his address earlier in the week, the policymaker alluded to a reduction in interest rates; hence, the bull's concerns are justified. In addition, the cautious outlook ahead of the crucial US employment report for November, for which preliminary indications have been negative and which may favor Australian buyers if actual results match forecasts, could weigh on prices.

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