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On June 16, Paul Eitelman, global chief investment strategist at Russell Investments, said that U.S. Treasury yields are already at an attractive level, with 10-year Treasury yields currently above the agencys estimated fair value. Compared to our fair value estimate of 4.1% for 10-year Treasury bonds, the current U.S. Treasury yield is quite attractive. Russell Investments baseline forecast believes that U.S. economic growth and potential inflation will gradually slow, a trend that will eventually support the Feds resumption of its interest rate cut policy. According to Tradeweb data, U.S. Treasury yields fell last Friday (due to Israels attack on Irans nuclear facilities), and currently all yields are slightly up.June 16, Russell Investments analyst Paul Eitelman pointed out in a report that the Federal Reserve may keep interest rates unchanged throughout the summer due to the impact of tariffs and geopolitical risks. The global chief investment strategist said: "Fed Chairman Powell may continue to be vigilant about the risks posed by tariffs and emerging conflicts in the Middle East." He said that the Fed believes that tariffs will pose a downside risk to the economy, but this weakness has not yet appeared in the data, and inflation has remained stable. Eitelman said: "We expect one, perhaps two rate cuts before the end of this year."Sources: An Air India Boeing 787-8 Dreamliner en route from Hong Kong to Delhi was forced to turn back as the pilot suspected a technical problem in the air.Iranian President Pezerhizzian: We must unite against the genocidal aggression of the Israeli regime.On June 16, local time, Iranian Parliament Speaker Qalibaf said that with the support and connivance of the US government, Israel has committed new crimes against Iran. Iranian people of all nationalities and political positions have now united to fight the enemy. Qalibaf said that a large part of the enemys attacks did not come from external military operations, but were carried out by infiltrators within Iran. It is reported that Iran recently executed a person who was accused of spying for Israeli intelligence agencies.

AUDUSD fluctuates near 0.6670 support as higher Treasury yields bolster US Dollar rebound

Daniel Rogers

Nov 18, 2022 15:14

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AUDUSD stalls at 0.6690 following a two-day decline as bears seek fresh signals to end a four-week uptrend. Friday's light economic calendar offers a challenge for sellers of the Australian dollar throughout the Asian trading session. Notwithstanding, the US Dollar's recovery, aided by increased Treasury yields, mixes with the market's pessimistic outlook to keep pair sellers upbeat.

 

US Dollar Index (DXY) appears to be recovering from a three-month low hit earlier in the week, as a result of recent assertive words from US Federal Reserve (Fed) officials and better top-tier data from the United States. The dollar disregards Thursday's conflicting secondary numbers as a result.

 

The solid Retail Sales and Producer Price Index (PPI) numbers for the month of October appeared to favor Fed hawks. However, James Bullard, president of the Federal Reserve Bank of St. Louis, remarked on Thursday that the US Federal Reserve's (Fed) monetary policy is not now deemed restrictive enough to reduce inflation. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, issued his most recent comments along the same vein. The Federal Reserve's Kashkari stated, "With inflation still high and monetary policy tightening already underway, it is unknown how high the US central bank will have to raise its policy rate."

 

In terms of data, the US Philadelphia Fed Manufacturing Index declined to -19.4, compared to -6.2 market estimates and -8.8 previously. In addition, Housing Starts decreased by 4.2% month-over-month in October, following a 1.3% decline in September, and Building Permits decreased by 2.4%, compared to a 1.4% increase the previous month. In addition, Jobless Claims decreased to 222K for the week ending November 11 compared to the 225K predicted and upwardly revised 226K the previous week.

 

Domestically, Australia's Employment Change increased by 32,2K versus 15K market forecasts and 0.9K previously, while the Unemployment Rate decreased to 3.4% from 3.5% previously and 3.5% forecasts. Especially with the publication of the solid Wage Price Index, the employment data gained a boost in their ability to attract buyers. However, it appears that previous dovish remarks from Reserve Bank of Australia (RBA) officials have kept AUDUSD purchasers on the board.

 

In addition, elevated tensions between Russia and Ukraine as a result of missile strikes against Poland and growing Covid counts in China weighed on market sentiment and the risk-barometer pair.

 

Wall Street ended in the red, echoing sentiment, while 10-year Treasury yields rose from a six-week low.

 

A lack of significant data/events could allow bears to catch their breath, but risk-averse sentiment and hawkish Fed concerns could drive the AUDUSD price close to the weekly loss.

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