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Market news: Samsung SDI has signed a 1.5 trillion won energy storage system battery agreement with a US company.March 16th - As soaring oil prices fueled investor concerns about inflation and economic growth risks, the U.S. Treasury market has erased all of its year-to-date gains. A Bloomberg U.S. Treasury performance indicator has turned negative year-to-date after falling 1.7% since the end of February. Stagflation fears have pushed up yields, forcing Wall Street to lower its expectations for U.S. interest rate cuts over the next year. Morgan Stanley strategist Bradley Tian and others stated, "Energy-driven inflation and policy uncertainty continue to put pressure on long-term U.S. Treasuries." Bonds in the U.S., Japan, and Australia have all fallen, and a global bond index has also wiped out its year-to-date gains. Bob Savage, head of macro strategy at BNY Mellon, said, "Geopolitical uncertainty and increased cross-asset volatility are likely to persist in the near term until markets develop confidence that the conflict with Iran is stabilizing."According to the Wall Street Journal, the CEOs of ExxonMobil, Chevron, and ConocoPhillips warned US President Trumps officials that a war with Iran disrupting the Strait of Hormuz would exacerbate the energy crisis.According to the Wall Street Journal, the oil industry warns that the energy crisis caused by the Trump administration is likely to worsen further.On March 16, the Peoples Bank of China (PBOC) announced that it will conduct 500 billion yuan of outright reverse repurchase operations today (March 16) through a fixed-quantity, interest rate bidding process with multiple price levels, for a term of six months (182 days). Since 600 billion yuan of six-month outright reverse repurchase agreements mature in March, this operation by the PBOC means that the amount of six-month outright reverse repurchase agreements renewed this month has been reduced by 100 billion yuan.

AUD/USD falls below 0.7070 despite a positive Services PMI from Caixin

Alina Haynes

Feb 03, 2023 15:29

Despite the release of good Caixin Manufacturing PMI (January) data from IHS Markit, the AUD/USD pair has established a new daily low at 0.7064. The economic data came in at 52.9, which is significantly higher than the consensus estimate of 47.3 and the prior report of 48.0. China's Services PMI has stayed upbeat despite the Lunar New Year celebrations in the last week of January.

 

Notable are the facts that Australia is China's largest trading partner and the Australian Dollar is its currency.

 

The Australian Dollar is likely to be influenced by the Reserve Bank of Australia's (RBA) anticipated interest rate announcement on Tuesday. In view of the unexpected rise in the Australian Consumer Price Index (CPI) to 7.8% in the fourth quarter of CY2022, RBA Governor Philip Lowe may maintain his aggressive stance regarding interest rates.

 

Deutsche Bank Australia analysts believe that the RBA will likely hike the Official Cash Rate (OCR) to 4.1%, citing the most recent inflation update, which revealed a slightly higher-than-anticipated 7.8% increase in the CPI. Forbes Advisor states, "While the RBA will likely move more slowly in 2023 than it did in 2022, we now anticipate four additional 25 basis point hikes in 2019: 25 basis points in February and March, and 25 basis points at the May and August meetings."

 

In the meanwhile, investors have been risk-averse due to rising anxiety preceding the United States' Nonfarm Payrolls (NFP) data release. Futures on the S&P500 and other perceived-risk assets are under heavy pressure. The US Dollar Index (DXY) has rebounded to approximately 101.50 after a corrective move and is expected to remain under the hands of bulls moving forward. In anticipation that the Federal Reserve (Fed) may suspend its policy tightening, 10-year US Treasury yields have fallen to approximately 3.38 percent.


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