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August 14th - Speculative investors are increasingly betting on another rate hike by the Reserve Bank of Australia (RBA) in November, as inflation remains above the central banks target. Swap market pricing currently estimates a 45% probability of a 25 basis point rate hike by November, up from 38% before Tuesdays RBA rate decision. Trading activity in the November 2026 interbank cash rate futures contract, traded on the Australian Securities Exchange (ASX) derivatives market, rose to a more than three-month high, indicating increased speculative interest. These bets suggest growing market skepticism that the RBAs tightening cycle is not yet over. Although policymakers kept rates unchanged this week, traders will continue to watch upcoming price and employment market data for clues as inflation remains above the RBAs 2%-3% target range.At the close of the morning session, most domestic futures contracts rose. Rapeseed oil and lithium carbonate rose by more than 2%, while industrial silicon, soybean meal, low-sulfur fuel oil (LU), fuel oil, live pigs, synthetic rubber, polysilicon, and coking coal rose by more than 1%. On the downside, palladium fell by more than 3%, silver and platinum fell by more than 2%, and stainless steel (SS) and gold fell by nearly 2%.The local governor said a fire broke out in the port of Ust-Luga, Russia.August 14th - According to foreign media reports, Australian homebuyers continue to reduce borrowing, with new housing loans experiencing their largest drop since the pandemic. Tax reforms and falling house prices have prompted buyers to wait for signs of a market bottom. In the three months to June, new housing loans in Australia fell by 5.2% compared to the first quarter, the largest drop since the end of 2022. Investor borrowing fell by more than 10%, while owner-occupier loans fell by 1.9%. This data confirms the market weakness previously reported by major Australian banks. All three of the countrys major banks reported a significant drop in mortgage applications during the period. With reduced tax incentives diminishing the attractiveness of home purchases for investors, and continued house price declines prompting other buyers to wait for the market to bottom out, housing demand is likely to remain weak. The simultaneous decline in both house prices and loans indicates that Prime Minister Albaneses attempt to curb the increasingly unaffordable housing market through new tax policies is beginning to have an effect.JPMorgan Chase lowered its price target for Honeywell from $262 to $255.

Prior to the release of Australian employment data, the AUD/JPY pair attempts to regain 89.00

Alina Haynes

Apr 12, 2023 13:44

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The AUD/JPY pair attempts to reclaim the critical resistance level of 89.00 during the Asian session. Kazuo Ueda, the governor of the Bank of Japan (BoJ), has advocated for an extension of the already decade-long ultra-loose monetary policy in order to consistently achieve an inflation rate above 2%.

 

The decelerating Producer Price Index (PPI) contradicts the optimistic outlook of the Japanese government regarding wage growth. As expected by market participants, the March PPI did not change. The annual PPI came in at 7.2%, which was higher than the consensus estimate of 7.1% but lower than the previous release of 8.1%. The inability of companies to sustain accelerating production rates at factory gates is indicative of weak household demand.

 

Analysts at Commerzbank anticipate that the Japanese Yen will only appreciate over the long term if the current monetary policy is abandoned quickly.

 

Regarding the Bank of Japan's (BoJ) Yield Curve Control (YCC), the IMF has stated that allowing more flexibility in YCC could have repercussions for global markets, but it could also prevent future policy shifts that could result in significant spillovers.

 

Investors are awaiting the March Employment Report for fresh impetus in the Australian Dollar. The market expects the Australian economy to add 20,000 employment, which is less than the previous estimate of 64.6K. While the Unemployment Rate is expected to rise to 3.6% from 3.5% in February, it is anticipated that the Unemployment Rate will increase to 3.6%.

 

Governor Philip Lowe of the Reserve Bank of Australia (RBA) has left the door open for additional rate hikes if Australian inflation persists, so the publication of stronger-than-expected employment gains could reignite fears of additional rate hikes.

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