AUDUSD: Week Ahead

Inflation figures have remained elevated and that has further increased rumors of at least a 75bps rate hike from the Fed Reserve. With Fed funds future prices suggesting a 20% chance of a 100bps still happening, it’s unlikely that Fed would go that far.

Russia’s war with Ukraine continues despite the agreement last week allow Ukraine to ship grain out of its Odesa port as Russian missiles struck the port on Saturday. Ukraine continues to prepare to ship grain which is considered as a huge potential relief to global food shortage.

Investors will weigh all the data and Fed guidance to formulate an opinion about whether the economy will hit a hard or soft landing if not a recession.

This week is dominated by US data with the Australian Inflation report the only high event impact event relating to the AUD.

The FOMC statement and Fed Chair Powell’s press conference will be in some ways more needle moving for the market. CPI and GDP numbers comes out towards the end of the week. US GDP is expected to be positive which would eliminate the technical definition of a recession. US CORE PCE prices are expected to jump to a growth of 0.5% month over month from 0.3% last month.

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