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UAE Presidents Foreign Policy Advisor: The UAE is exercising restraint and seeking a way out for Iran and the region.The UAE presidents foreign policy advisor said Irans accusations against the UAE are "part of its unwise and chaotic policy."On March 15, S&P Global Ratings affirmed Saudi Arabias sovereign credit rating, adding that despite disruptions, non-oil growth momentum and related non-oil revenues should help support the economy. S&P stated that Saudi Arabia should be able to withstand the impact of the current conflict with Iran. S&P noted that the country should be able to shift oil exports to the Red Sea, utilize its vast oil storage capacity, and increase oil production post-conflict. The Saudi government should also be able to adjust investment spending related to "Vision 2030," a strategic framework launched by the country in 2016.On March 15th, Matt Reed, Vice President of the geopolitical and energy consultancy Foreign Reports, stated that an attack on Kharg Island could trigger Iranian retaliation against Gulf oil-producing countries. He said, "Iran will retaliate in kind." The United States warned on Friday that if Iran continues to block the Strait of Hormuz, Kharg Islands oil facilities could become the next target. Reed warned that the longer the conflict continues, the harder it will be to find alternative energy supplies. "At least 10 million barrels of oil are trapped in the Gulf every day, plus more than 4 million barrels of refined petroleum products and tens of billions of cubic feet of liquefied natural gas, with no easy alternatives." The International Energy Agency has announced the largest emergency oil reserve release in history, with 32 member countries planning to release approximately 400 million barrels of oil. However, Reed believes this measure will have limited effect, stating, "By the time the oil gets to the market, it may be too little, too late." He described it as nothing more than a "band-aid."On March 15th, local time, the Iranian Islamic Revolutionary Guard Corps issued a statement saying that in the past 48 hours, the US and Israel had launched attacks on several civilian industrial facilities in Iran, resulting in the deaths of several workers. The statement said that after setbacks in its confrontation with Iran, the US and Israel have turned to attacking non-military industrial facilities. Iran warned that US companies in the region should withdraw from their facilities and urged nearby residents to stay away from industrial areas with US capital involvement to avoid potential attacks.

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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