Risk appetite fell away yesterday evening with US equities finishing lower and Asian equities overnight dropping off as well. AUD has continued to gain overnight after the RBA Governor Bullock reiterated hawkish comments from earlier in the week, stating the Bank “will not hesitate” to raise rates if needed. GBP continues to weaken.
*Daily move - against G10 rates at 7:30am, 08.08.24
** Indicative rates - interbank rates at 7:30am, 08.08.24
With JP Morgan raising the chances of a US recession this year from 25% to 35%, focus today will be on the weekly Initial Jobless Claims. A higher number will fuel the fears of rising unemployment and that the economy may be in trouble. As a result, we may see markets once again raise the prospects of larger rate cuts by the Fed, which would be USD negative. A lower number will encourage risk appetite but also be USD positive on the basis of less fear about prospects for the US economy.
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