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US equites finished lower on Wednesday after a double digit CPI figure out of the UK saw traders ramping up their hawkish central bank pricing. The July FOMC minutes released late in the session softened the blow somewhat on the back of some participants noting the risk that the Fed could tighten more than necessary, this was seen as dovish, or more accurately “less hawkish” than anticipated, giving US equites a temporary lift which did fully retrace by the end of the session.
In FX, the US Dollar was mostly stronger on a combination of bond yields rising after the FOMC and a flight to safety as equities remained under pressure. AUD and NZD were underperformers in G10 currencies, the AUD already had the headwinds of softer-than-expected Wage Price Index data, coupled with weakness in the commodity markets, especially iron ore and copper saw the AUDUSD well below the psychological 0.70 US level. NZD fared relatively better with the hawkish 50bp hike from the RBNZ earlier in the day bolstering the kiwi somewhat.
Despite a shock double digit UK CPI figure of 10.1%, Sterling only managed a brief pop, which was sold off quickly on heightened UK recession fears and a strong USD.
Cryptos again came under pressure, with a 4th straight losing session on Bitcoin taking the price below 23500 and breaching its lower trend line.
Coming up today, a closely watched (by the RBA and traders alike) Australian employment figure which will take on extra importance for the AUD after yesterdays weaker than expected wage data, due to be released at 11:30 AEST.
US manufacturing figures and jobless claims will be out an hour before their cash session starts.
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