US Economic Relief As Inflation Softens

Inflation Easing in USA

USA wages and employment costs showing the smallest increase in two years, meaning costs are increasing, but at the lowest increment, which is a good sign that inflation is easing. With preferred inflation metrics easing to a more ‘normal’ level, this is a great sign for the American economy and those living in it.

Wall Street Boost

The Wall Street Index (US30) is close to all time highs once again, with a powerful month in July, ramping up the value. Often traders will see a rejection slightly above the previous highs as orders and stops are soaked up, before taking a downward turn. That means there could be more upside for the US30 and correlated global indices. 

Hard Commodities and the AUD

An inverse reaction has been noticed on the AUDUSD over the past 3 weeks, moving from the high $0.68 area down to the high $0.65 price area. This move shows strength in the USD and likely a positive for hard commodities, which USA is rich in. The export opportunity on hard commodities, combined with the lowered value of the AUD compared to the USD will present excellent opportunities for importers overseas. 

Canada Pushes Back

Canada’s currency, CAD has been strong against the AUD and is reaching pricing levels which have seen rejection in the past (looking at a weekly chart over the past year. The CAD has had a strong run, lowering the AUDCAD currency pair, however will it continue beyond what tends to happen in the past? 

Will traders willing to hold onto this position for a few months be rewarded? 

Both USA and Canada hold hard commodity deposits which make up some serious export and economic power, but if the AUD is seen as far cheaper, this could bring the need for the AUD among buyers, propping the Aussie Dollar back higher from here.