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The Stoxx Europe 600 index rose 0.3%, hitting a new record high.On October 29th, ING analyst Chris Turner stated that recent weaker-than-expected UK inflation and employment data have increased market expectations for a Bank of England rate cut, putting downward pressure on the pound and UK government bond yields. Furthermore, the potential fiscal austerity measures in the UK autumn budget, to be announced on November 26th, should support an earlier rate cut by the Bank of England. Data shows that the market now expects a 74% probability of a rate cut in December, compared to 44% in early October.BlackRock (BLK.N) and the Saudi Public Investment Fund (PIF) continue to drive strategic growth for BlackRocks Riyadh investment management platform. BlackRock will launch a mutual fund focusing on Saudi systemic active equities and Middle East and North Africa fixed income.On October 29th, market analyst Giuseppe stated that ADP released its four-week U.S. employment data for the period ending October 11, 2025, showing an average weekly increase of 14,250 jobs, which translates to approximately 57,000 jobs added over those four weeks. The Dallas Fed estimated in early October that the current break-even point was around 30,000 jobs per month, making 57,000 significantly higher. Given the lack of government data, the strong rebound signal from ADP could make Fed Chairman Powell more cautious in hinting at a December rate cut. If so, it would be seen as a hawkish surprise and significantly impact the market. Furthermore, Waller, one of the most dovish Fed governors and a candidate for Fed Chair, has also stated that the ADP data is one of his reasons for supporting a rate cut. Recently, he stated, "I still believe in a rate cut, but we need to be cautious about it."On October 29th, Giuseppe Dellamotta, an analyst at the US financial website InvestingLive, stated that he expects the Bank of Canada to cut interest rates by 25 basis points to 2.25%, which is the lower end of his estimated neutral interest rate range (2.25%-3.25%). The market still believes that the Bank of Canada is very likely to end this rate-cutting cycle at 2.00% sometime in 2026. At the press conference, Bank of Canada Governor Macklem is not expected to provide any clear forward guidance. Recent expectations of a rate cut have solidified, mainly due to some dovish comments from Macklem and the renewed tensions between the US and Canada over tariffs. While we all know that the US and Canada will eventually reconcile, for now, this risk should give the Bank of Canada reason to be dovish. If the Bank of Canada keeps rates unchanged, this would be seen as a hawkish surprise, and the Canadian dollar should strengthen across the board. However, in the current context, surprising the market may not be a good thing for the bank.

AUD/USD falls approaching 0.7200 despite the former RBA governor's aggressive forecasts

Alina Haynes

Jun 08, 2022 11:59

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Bears and buyers continue to fight for position around 0.7220-25 as sentiment is mixed and investors remain cautious ahead of the week's big data/events. In doing so, the Australian duo struggles to defend the hawkish remarks of former Reserve Bank of Australia (RBA) Governor Ian Macfarlane.

 

Ex-RBA Governor Macfarlane warned early Wednesday morning about chronically rising inflation and the need to drastically increase interest rates. The former policymaker also stated, "There is sufficient scarcity in Australia and the United States to maintain a high inflation rate."

 

In contrast, China's Vice Commerce Minister Wang Shouwen joined China's Vice Finance Minister Zou Jiayi in reiterating concerns about a global economic downturn and a decline in demand. Recent consensus among policymakers held that the rise of global demand is slowing.

 

It's worth noting that a rebound in US Treasury rates and apprehension ahead of Thursday's European Central Bank (ECB) meeting, as well as Friday's US Consumer Price Index (CPI) for May, tend to stifle the AUD/USD pair's movements.

 

In spite of this, 10-year US Treasury note rates jump two basis points (bps) to 2.99 percent the day after breaking a six-day downward trend. A record decline in the US trade deficit and optimism on the US budget appear to have prompted a recall of US Treasury bond sellers. The US trade deficit for April decreased 19.1 percent from the previous day to USD87.1 billion.

 

Other market optimists were defended by US Treasury Secretary Janet Yellen and optimism for a quicker economic rebound in China. Tuesday, US Treasury Secretary Yellen spoke before the Senate Finance Committee about the Fiscal Year 2023 Budget while stating that the US economy faced problems from "unsustainable levels of inflation" and supply chain disruptions. The official said, "An adequate budget is necessary to support the Fed's efforts to control inflation without damaging the labor market."

 

It should be noted that World Bank (WB) President David Malpass's warning that faster-than-anticipated tightening might force certain nations into a debt crisis akin to that of the 1980s appears to have impacted on the quotation as of late. The risk-negative news from Ukraine may follow a similar trajectory. Politico reported that Ukraine has not yet achieved a deal with Russia or Turkey to enable the safe passage of its grain ships in the Black Sea, casting doubt on a U.N. initiative to build a crucial food corridor.

Technical Evaluation

A two-week-old support line protects AUD/USD buyers at 0.7205. However, the 200-day moving average and the recent top, located around 0.7255 and 0.7285, may challenge the Aussie pair's upside before the bulls regain control.


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