The Australian dollar dropped on Wednesday as hostilities flared anew in the Middle East. Iran targeted American forces in the Middle East with ballistic missiles, US Central Command said.
Easing fuel costs helped temper Australian consumer price growth during the last quarter. Given underlying inflation below market projections, pressure on the RBA to increase interest rates has diminished.
The central bank has raised the key rate three times this year with consumer prices rising 3.8% in June. Wednesday's report showed higher commodity prices are still flowing through the economy.
The market now sees just a 4% chance of a rate hike next month. Meanwhile, traders believe there is still a 50-50 chance of a rate increase happening later this year.
Labour market also remained unexpectedly robust, with strong June employment growth offsetting a minor increase in the headline unemployment rate. That helps underpin the price pressures.
Earlier this month an Australian government report said efforts by China's state-backed iron ore buyer to cut costs for Chinese steel mills may push down prices in the medium term.
EBC Financial Group analyst says, the Aussie dollar experienced a corrective bounce that faces immediate downward pressure. A break below $ 0.6946 would expose the next support around $0.6920.
Asset Recap
As of market close on 28 July, among EBC major products, Sherwin-Williams shares led gains as the firm found an uptick in business from professional clients in data centres, semiconductor infrastructure, and manufacturing.
Micron's stock sunk toward worst monthly drop in 11 years as China fears escalate. US chip stocks were extending sharp declines on Tuesday as developments in Asia send ripples overseas.
South Korean shares plunged as a global selloff in chipmakers weighed on technology heavyweights, pressured by concerns over intensifying competition and a steep decline in SK Hynix's ADR.
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EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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