Forex News May 03, 2022
Aussie Dollar:
The Australian Dollar found support after the RBA raised the cash rate target to 0.35%, an increase of 0.25% from 0.10%. The market had anticipated a move of 0.15%, although several analysts scoped out 0.25% or possibly 0.40% in the aftermath of accelerating inflation. A move of 0.25% is seen as neutral, against the backdrop of the current federal election campaign. Moving rates by 0.25% has been the standard measure since the inflation targeting regime was mandated in 1993.
Crude Oil:
Oil prices are pacing higher on Tuesday through Asia-Pacific trading as energy prices extend gains from April amid supply concerns stemming from Russian products. The European Union (EU) is reportedly drafting an embargo on Russian oil exports. Hungary and Slovakia, two members highly dependent on that oil, would likely be given an exemption under the embargo. That would help ease some supply pressures in Europe overall, but the net impact would likely push oil prices higher.
Gold:
Rates continue to rally in the US and the US Dollar just hit a fresh 19-year-high. These are both generally bearish factors for Gold although it’s not impossible for Gold to rally with both rates rising and the US Dollar trending higher. But, given the backdrop where inflation is raging and the Fed is widely-expected to quicken their approach at tackling inflation, and there could be more trouble ahead on the fundamental side of Gold.
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