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26 Jul 2023

Data dependent Fed, lower Australian CPI

• Fed hike. Another rate rise from the US Fed. But it remains data dependent when it comes to future moves. USD a bit softer, tracking a slight dip in US yields.• AUD weaker. AUD underperforms after Q2 CPI undershot predictions. In response markets have reduced RBA rate hike expectations.• AUD events. ECB meeting, US GDP & jobless claims tonight. Australian retail sales & BoJ announcement tomorrow. RBA next week. The US Fed decision and Chair Powell’s press conference were in focus overnight. As widely expected, the US Fed hiked interest rates by another 25bps, taking the target range up...

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Price action slows ahead of Fed decision

Markets are looking essentially directionless as traders batten the hatches ahead of this afternoon’s Federal Reserve decision. The dollar is seeing some selling, but is holding near a two-week trade-weighted high against high-beta currencies and the euro, equity futures are mixed, and Treasuries are broadly flat.    North America Today’s biggest macroeconomic event will occur around 1:30 this afternoon, when the Bank of Canada is scheduled to release a summary of deliberations from its early July meeting. I kid: most market participants (including myself) will likely be too busy shotgunning espresso ahead of the Fed decision to pay it much heed – and Governor...

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Australian inflation: lower but not low

For the first time in a while, the more detailed quarterly Australian CPI figures undershot expectations. The downside inflation surprise has seen the AUD dip in knee-jerk fashion towards its recent lows (now $0.6760) with the data creating a bit of doubt in the minds of markets as to whether the RBA will hike rates again at the 1 August meeting. In terms of the data, headline inflation slowed to 6%pa. This is down from 7%pa in Q1 and a peak of 7.8%pa in Q4 2022. The market was looking for headline inflation to slow to 6.2%pa, while the RBA...

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