AUD/USD Eyes US inflation, Aussie Jobs Report

Thursday should be a busy day for the Aussie, with Australia releasing employment data and the US publishing retail sales numbers. Australia’s job growth is expected to rebound with a gain of 23,000 in August, after a decline of 14,600 in July. US retail sales are expected to fall in August by 0.2% m/m, down sharply from 0.7% a month earlier.

GBP/USD Analysis: Price Sets a Minimum of 3 Months After GDP News

Disappointing UK economic data was released this morning. According to the Office for National Statistics, real gross domestic product fell by 0.5% in July 2023, with declines occurring across a range of sectors. The last time a decline of this magnitude occurred was in February of this year.

Crypto's Landslide; Bitcoin's Trying to Form a Trough

We saw another attempt to shake up the crypto market on Monday and Tuesday. Still, the balance sheet quickly recovered with a total capitalisation of $1.033 trillion, just as before Monday’s $1 trillion failure. On a broader basis, the market is still sliding down bit by bit, as the equilibrium level was closer to 1.05 from the 18th to the 30th of August, dropping to 1.04 in early September, and is now hovering just above 1.033.

US: Despite Upside Surprise, Core Inflation Continues to Trend Favorably

After two months of softer prints, core inflation surprised to the upside in August, highlighting what we have been saying for some time that progress is unlikely to come in a linear fashion. That said, even after accounting for the stronger monthly gain, the three-month annualized change on core still slipped to 2.4% – the slowest pace of growth since March 2021.

Sunset Market Commentary

Headline US inflation rose by 0.6% M/M as expected (highest since June 2022) with the Y/Y-figure rising from 3.2% to 3.7% (vs 3.6% expected). The increase came on account of a 10.6% M/M increase in gasoline prices. We warned before that energy prices and energy commodity prices risk complicating the global disinflationary process in coming months.

Dollar Wavers after US Inflation Report

Inflation is not easing enough for the Fed to abandon their hawkish stance.  The upside surprises might be small, but that should keep the hawks in control.  Core inflation heated up for the first time in six months and that should have markets leaning towards one more Fed rate hike in November.  Inflation will likely still be running well above the Fed’s 2% target for the rest of the year, but a weaker consumer supports the case the disinflation process will remain intact. ​

ECB Decides, ARM Goes Public

Not earlier than the beginning of this week, the expectation for today’s European Central Bank (ECB) meeting was a no rate hike. Today, just a few hours before the meeting, the pricing is pointing at a 25bp hike as the most likely scenario; money markets are pricing in a 68% chance for a 25bp hike.

ECB Day Ahead

We expect the ECB to hike by 25bp at today's meeting. The market pricing is 16bp (up 3bp since yesterday) following the Reuters story on an upward revision to the 2024 inflation forecast in today's staff projections. In our opinion, this is a natural (and expected) consequence of rising energy prices since the latest projection round in June. The key factor for today's decision will be the projected core inflation path until 2025.

A 25 bps ECB Rate Hike Today is Our Preferred Scenario

A 25 bps rate hike today is our preferred scenario as well. Apart from the pivotal inflation argument, we think that from a communication perspective the ECB will prefer a dovish/neutral hike over a hawkish skip. It allows time to extend the data-dependent approach until the December policy meeting with new quarterly updates and to pause in October. From a short-term perspective, it offers the benefit of clarity, reducing market volatility.

AUD/USD – Buoyed by Australian Jobs Data as Markets Consider One More RBA Hike

The Australian jobs data on Thursday was surprisingly good, with the number of new jobs created vastly exceeding expectations, although the bulk were in part-time roles.