The visit by US House Speaker Nancy Pelosi to Taiwan spooked markets this week as fears circulated around a potential flare-up between China and the US. However, most analysts saw this as posturing, and calm quickly returned to stocks. The Reserve Bank of Australia followed the Fed in moving to a meeting-by-meeting basis and the Bank of England did too stressing it was not on a ‘pre-set path’. Next week expect US Core inflation to be a key focus. The best opportunity will likely come from any indication that peak inflation has been and gone, so this is a ‘don’t miss’ economic data release.

Other key events from the past week

  • AUD: Interest Rate Decision, Aug 02: The RBA moved to a meeting-by-meeting basis this week as they want to assess incoming data before guaranteeing a commitment to further rate hikes. You can read more on the details here.
  • GBP: Interest Rate Decision, Aug 04: The Bank of England gave a dour out-look for growth in the UK sending the GBP lower. The 2023 recession projections were brought forward to Q4 2022 and are now expected to last for 5 quarters.
  • Geopolitics: US, China, & Taiwan Aug 02: US House Speaker officially concluded her visitor to Taiwan on Wednesday this week in a move that had markets jittery on Tuesday. However, geopolitics tends to have a short-lived reaction in markets. See here for a historical assessment.

Key events for the coming week

  • AUD: Consumer confidence, Aug 09: After the RBA’s more dovish decision last week will the Australian consumer show signs of stress over rising inflation and higher interest rates? See the RBA’s last decision here.
  • Going for gold? Gold has some great seasonals in play right now. See here. 
  • USD: Core Inflation, Aug 10: Expectations are US Core inflation will fall to 8.9% from 9.1% y/y. However, if inflation remains high & prints above 9% the USD could find bids if investors think the Fed will still hike rates aggressively.

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