Japan Services Producer Prices Rise 3.2% in June, Supporting BOJ Rate Hike Expectations 
Morgan Stanley Sees Fed Holding Rates as U.S. Inflation Cools 
Chile Central Bank Holds Interest Rate at 4.5% as Inflation and Global Risks Persist 
Fed Minutes Signal Rate Hikes Remain Possible as Inflation Risks Persist 
Australia Inflation Cools as Core CPI Misses Forecasts, Easing RBA Rate Hike Pressure 
BOJ Rate Decision in Focus as Sticky Inflation, Weak Yen Shape USD/JPY and Nikkei Outlook 
BOJ Expected to Hold Rates Steady While Signaling More Hikes Ahead 
Gold’s Bull Run Intact: Safe-Haven Bids Overpower Treasury Yield Pressure 
Goldman Sachs Names 9 Top Japanese Semiconductor and Electronics Stocks 
Schott Pharma Stock Rises as Barclays Upgrades Rating on Growth Outlook 
China Set to Hold Benchmark Lending Rates Steady for 15th Month 
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The global hunt for yield has favored the AUD, which is currently outperforming iron ore. The AUD has gained 6% against the MXN since late January on the back of the global hunt for yield. The AUD would also suffer in the event of a Trump presidency, but has far less to gain than the MXN in the event that the opinion polls are accurate.
Where MXN currently looks cheap relative to the USD, when we compare that pair to oil prices, AUDUSD looks expensive relative to interest rate developments. AUDUSD is outperforming both iron ore, one of its key drivers, and, even more massively, the short-term interest rate differential.
The AUD is being supported by the low volatility environment, favouring the carry trade. The RBA cut rates as expected on 2 August, and one more cut this year remains a possibility (priced at 50% by year-end). However, the currency subsequently appreciated despite AUD rates reaching an all-time low (2y swap rate below 1.85%), making it vulnerable to the next blip in risk conditions.
