Interbank, DOW. “U.S. stock futures moved lower in overnight trading on Sunday as investors grew concerned about the economic ramifications of the fighting between Russia and Ukraine.” See article here. Source: CNBC
Interbank, Asia, stock market. “U.S. crude was up more than 5%, and shares in Asia-Pacific traded lower on Monday as investors monitor the Russia-Ukraine crisis and related sanctions.” See article here. Source: CNBC
Interbank, Japan, Russia, SWIFT. “Japan said it is weighing its response to global moves to punish Russia for its invasion of Ukraine by further isolating the country from international banking transactions.” See article here. Source: The Asahi Shimbun
Interbank, Russia, central banks, sanctions, gold. “The lure of gold has been an ever-present throughout history — particularly in periods of geopolitical uncertainty. If Russia is selling below market rates, then we think someone, somewhere will be willing to take the risk.” See article here. Source: Financial Times
Interbank, Russia, foreign exchange reserves, sanctions. “The Biden administration and its European allies vowed Saturday to block Moscow’s access to its sizable foreign currency reserves in the West, teeing up one of the most powerful financial penalties and threatening to send the Russian financial market into free fall.” See article here. Source: The Washington Post
Foreign exchange rates of interest in Asia as of 9:08 pm AST
Last night, I bet on an increase in the AUD-USD exchange rate after reading analysis that the currency pair was seeing resistance around 0.7500 USD with lows between .7440-.7480 USD. While inflation in Australia is lower than in the United States (3.8% vs 5.4%), what helped tip me to the buy side was the higher yield on Australian 10-year government bonds (1.76%) versus the United States 10-year (1.63%).
Bank rates in Australia are slightly lower which tells me that their banks have a little more incentive to lend, which they may need given an expected slow retraction in inflation with expectations at 3.1%.
Meanwhile in the United States, Treasury secretary Janet Yellen and Federal Reserve chair Jerome Powell expect inflation concerns to dissipate next year.
Personally, I suspect that if there is any inflation it will be in certain areas of the labor market. I believe businesses with any vision will put in place labor work arounds where they will not require people to come into offices. Professional, “creative” type employees will be able to demand higher salaries while low wage earners will drive down earnings as they compete with more low-wage, unskilled workers.
Back to Australia, again, expect the inflation print tonight. I will be listening to how other central banks react. The news may temper the level of rate hikes they put in place. Just a thought …
WASHINGTON – On October 28, 2020, U.S. Treasury Secretary Steven T. Mnuchin participated in a conference call with the Finance Ministers of Australia, Canada and the United Kingdom to discuss policies to support business and employment in response to the COVID-19 pandemic. The call, hosted by Chancellor Rishi Sunak, is the latest in a series of regular calls among the Finance Ministers of the “Five Eyes” nations. The Ministers discussed various policy responses to support workers and businesses and collaborative efforts to promote a strong and sustained economic recovery.