In this article, we have covered the highlights of global market news about the AUD & USD, Gold Prices, Euro, and Bitcoin.
Inflation and recession weigh on the Australian Dollar while the U.S. Dollar gains ground.
The Australian Dollar fell to a two-year low overnight as demand for U.S. dollars increased in the face of rising dangers to global economic development.
Fears of a recession are fueled by tightening monetary policy to combat rising inflation, while China’s zero-case Covid-19 policy restrains activity in the second-largest economy in the world. Risky assets, notably the Australian Dollar, have been pressured by these headwinds.
The US CPI will be reported on Wednesday, and according to a Bloomberg poll of experts, headline inflation will be 8.8% on a year-over-year basis. This would favor the Federal Reserve raising interest rates by 75 basis points at its Federal Open Market Committee (FOMC) meeting later this month.
Recent speeches and interviews by Fed Chair Jerome Powell have made it evident that the bank is focused on recovering price stability, which may impact economic growth.
Meanwhile, over the weekend, Shanghai announced its first case of the most recent, highly infectious Covid-19 sub-variant, BA.5 omicron. Supply chains are expected to remain congested for some time due to the domino effect of limitations, which will keep pricing pressures high for the foreseeable future.
Gold Prices Approach Potential Support as the U.S. Dollar Strengthens Before the US CPI
This morning, gold prices dropped to their lowest point since September 2021. Still, they have since regained their intraday losses and are now marginally higher via trade in the Asia-Pacific region. The prognosis for global growth is weakening, and aggressive central bank tightening has placed markets on guard. A recent epidemic of Covid cases in China is dampening spirits across the APAC region. For the second day in a row, the Hang Seng Index (HSI) in Hong Kong is declining.
Trading into safe-haven assets is boosting the U.S. Dollar, which works against the price of gold. The DXY Index is now trending upward for the third consecutive week. With the strengthening of the U.S. dollar, buying gold becomes more costly for overseas customers. Meanwhile, it seems that the Euro and Japanese Yen will continue to lose ground against the USD. The USD/JPY is at its highest level since 1998, while EUR/USD is approaching parity.
Euro in danger ahead of U.S. labor report
The euro hit a 20-year low on Friday as markets awaited U.S. employment data to determine the future course of the Dollar. The euro had just had its worst week in two months and was licking its wounds.
This week, the euro has fallen more than 2% as investors worry that gas shortages could affect Europe’s economy and slow economic development. It dropped overnight to a two-decade low of $1.0144 and barely holds onto parity, recently trading at $1.0185.
The U.S. dollar index reached a two-decade high of 107.270 this week thanks to the euro’s decline, and it was last barely below that mark and down 0.1 percent in Asia at 106.840.
“Europe is subject to significant vulnerabilities related to energy dependence, a consumer cost-of-living squeeze, and fragmentation risk. Consequently, the euro/dollar exchange rate would decline, “indicated Citi analysts.
Bitcoin falls against the soaring U.S. dollar as APAC traders assess China’s Flare-Up situation for Covid.
After fresh concerns about economic growth afflicted European and U.S. markets overnight, Asia-Pacific markets will begin with a risk-off sentiment. Bond dealers bought Treasuries, which decreased yields. The yield differential between 2-year and 10-year notes is further inverted. The U.S. dollar enjoyed increases across the board, and the DXY index reached new annual highs.
Chinese technology equities traded on U.S. exchanges saw intense selling pressure in New York. The Nasdaq Golden Dragon Index plummeted more than 7% compared to a 2.19 percent decrease in the Nasdaq-100 Index. In a comprehensive anti-trust action on Sunday, Chinese officials punished several businesses. Multiple Chinese cities, including Shanghai, have reported cases of the highly contagious Covid subvariant known as BA.5. The authorities are doing mass testing, but if the number of instances increases, more regulations may be necessary.
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