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On March 10th, TD Securities strategists stated in a report that the US dollar is currently acting as a "conditional safe-haven asset." They noted, "The dollar is no longer a natural safe haven, but the nature of the current shock has made it a safe-haven asset again." Because the US remains a relatively closed economy with energy autonomy and geographical isolation, the Iran war has driven safe-haven funds to the dollar. However, investors had significant short positions in the dollar before the conflict, and the correction of these positions has also supported the dollar. If the dollar were still the undisputed safe-haven asset, its gains would have been even more substantial.The S&P 500 turned positive after falling as much as 0.5%, the Dow Jones Industrial Average is now up 0.06%, and the Nasdaq Composite is up 0.19%.Israel Defense Forces: About 50% of the ballistic missiles Iran launched at Israel during the war were loaded with cluster bombs.UK Budget Responsibility official Myers: If energy prices remain at current levels, UK inflation this year will close to 3%, instead of the previously predicted 2%.On March 10th, a senior U.S. Department of Defense official stated that Google is deploying AI agents for approximately 3 million Department of Defense personnel to automate routine tasks. Emil Michael, Under Secretary of Defense for Research and Engineering, said that Googles Gemini AI agent can independently perform tasks after being set by users, initially running on unclassified networks. He added that the Department of Defense is discussing with Google deploying these agents on classified cloud platforms. Google Vice President Jim Kelly stated in a blog post on Tuesday that this new capability will allow civilian and military personnel at the Department of Defense to build AI agents using natural language. Google has previously faced internal criticism for its collaborations with the Department of Defense. In 2018, thousands of employees protested the companys involvement in Project Maven, a Pentagon plan to use AI to analyze video data from overseas drone warfare. The opposition ultimately led to Google not renewing its contract for the project.

The AUD/USD has dropped from its monthly high at 0.6990 due to poor Australian PMIs and a rebound in the DXY

Alina Haynes

Jul 22, 2022 14:50

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After retesting the monthly high earlier in the day, the AUD/USD continued to slide in Friday's Asian trading. It drops back down to where it started the day, at 0.6916. Recent declines in the Aussie pair may be attributable to the poor prints of Australia's flash readings of S&P Global PMIs for July. The resurgence of the US dollar in the face of pessimistic attitude also affects the pair.

 

S&P Global Manufacturing PMI for Australia dropped to 55.7 in July from 56.2 in June and the 56.4 forecast. Additionally, the S&P Global Services PMI dropped to 50.4 during the mentioned month, which was below the 55.0 consensus and the 52.6 readings seen previously. Moreover, the S&P Global Composite PMI has dropped from 52.6 in prior readings to 50.6 today.

 

Conversely, as risk aversion returns to the market, the US Dollar Index (DXY) is gaining bids and is on track to revisit its intraday high at 106.70, up 0.12% on the day. It's worth remembering that the DXY dropped the day before because it was pegged to US Treasury rates, and that the benchmark 10-year bond coupons had their worst daily loss since mid-June.

 

The yield drop might be the result of a number of factors, including the European Central Bank's (ECB) surprise rate hike of 50 basis points (bps) and the implementation of a new tool known as the Transmission Protection Instrument (TPI) to manage irrational market dynamics in the area.

 

Additionally, the Nord Stream 1 pipeline from Russia restarting its gas exports to Europe boosted market sentiment and aided AUD/USD purchasers the day before.

 

In light of this, Wall Street benchmarks ended the day stronger and the 10-year Treasury rates for the US Treasury had their greatest daily decline in five weeks. However, as of the time of publication, S&P 500 Futures are down 0.50 percent.

 

The ECB's decision to limit the market's confidence as well as long-standing worries about a recession and COVID are the sources of the most recent dip in mood.

 

Nevertheless, the risk-off attitude may affect the AUD/USD pricing going ahead. However, pessimistic predictions for the US PMIs in July give purchasers reason for optimism.


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