Stock Futures Dip as Investors Await Key Payrolls Data 
Eurozone Bond Yields Fall as Oil Slump Eases Inflation Fears Ahead of Central Bank Meetings 
Japan Services Producer Prices Rise 3.2% in June, Supporting BOJ Rate Hike Expectations 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
Global Markets React to Strong U.S. Jobs Data and Rising Yields 
Fed Minutes Signal Rate Hikes Remain Possible as Inflation Risks Persist 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
BOJ Rate Hike Expectations Rise Ahead of September Meeting 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
RBI Holds Repo Rate at 5.25% as Inflation Risks and Global Uncertainty Persist 
Chile Central Bank Holds Interest Rate at 4.5% as Inflation and Global Risks Persist 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
Fed Holds Interest Rates Steady as Kevin Warsh Says Rising Treasury Yields Tighten Financial Conditions 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Fed May Resume Rate Hikes: BofA Analysts Outline Key Scenarios 
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The Reserve Bank of Australia (RBA) left the official cash rate on hold at 1.50% as widely expected. Indeed, the RBA’s commentary today was remarkably similar to its statement in August. Market participants however, were looking for more cautious commentary, as suggested in a spike in the Australian dollar after the release. This comes with a backdrop of increasing uncertainty over the outlook, particularly for the global economy.
RBA Governor Lowe gives remarks later this evening at the RBA Board Dinner which typically involves a reflective and broad ranging speech.
Apparently, AUDUSD shows some sort of consolidation around 0.7200 ahead of the RBA decision this afternoon. A notable change, however was the recognition that the Australian dollar had “depreciated against the US dollar along with most other currencies”.
AUDUSD 1-3 month: The Aussie’s mid-August slide to 0.72 on Turkey-inspired global risk aversion left it quite oversold when judged by our short-term fair value estimate, which remains near 0.75. AU-US yield differentials have continued to drift in the US dollar’s favour in recent weeks but Australia’s key commodity prices have been mixed, overall a little higher since mid-August and a long way above March lows.
Still, AUD risks probably remain to the downside in September (0.70 handle), given the confluence of FOMC meeting, US review of China tariffs and EUR/Italy budget risks. By year-end we see AUDUSD back to 0.73.
OTC outlook: Most importantly, please be noted that the positively skewed IVs of 2m tenors signify the hedgers’ interests to bid OTM put strikes upto 0.70 levels (above nutshell). While bearish delta risk reversal also substantiates that the hedging activities for the downside risks remain intact.
Currency Strength Index: FxWirePro's hourly AUD spot index is inching towards 34 levels (which is bullish), while hourly USD spot index was at 75 (bullish) while articulating (at 06:43 GMT). For more details on the index, please refer below weblink:
