On Monday, the Russian rouble (RUB) was the best-performing currency among the 20 global currencies we track, while the Nigerian naira (NGN) showed the weakest results. The US dollar was the leader among majors, while the euro underperformed.
Hawkish Central Banks Put Downward Pressure on Gold
The gold (XAU/USD) price fell sharply to 1,916.50 on Monday due to hawkish comments from the Federal Reserve (Fed), which pushed the US dollar and Treasury yields higher.
‘Slightly hawkish Fed and global central banks are currently suppressing gold,’ said Everett Millman, the chief market analyst at Gainesville Coins. Millman predicts prices will fluctuate between 1,910 and 1,950 throughout the rest of the year. At the same time, rising borrowing costs could trigger a global recession. Thus, gold may outperform other safe-haven assets, like U.S. bonds, and rise higher—possibly above 2,000. However, the sentiment seems to be turning bearish for gold in the short term. According to Reuters, the SPDR Gold Trust (P:GLD) GLD (NYSE:GLD) holdings, the world's largest gold-backed ETF, fell to their lowest level since January 2020.
XAU/USD was falling during the Asian and early European session as the US Dollar Index (DXY) approached a one-year high. Today, traders should focus on the release of U.S. CB Consumer Confidence at 2:00 p.m. UTC. Lower-than-expected figures will positively impact XAU/USD, potentially pushing the price above 1,918. However, the bearish trend in the pair may continue if the figures come out better than expected.
U.S. Treasury Yields Reached a 16-year High, Putting Downward Pressure on AUD/USD
The Australian dollar (AUD) lost 0.28% on Monday as the US dollar surged on rising U.S. Treasury yields, which reached a 16-year high.
AUD/USD has been trading sideways since mid-August because traders' sentiment remains mixed amid uncertainty over the further path of interest rates. Last week, the protocols from the Reserve Bank of Australia's (RBA) September meeting showed that the regulator considered a 25-basis point hike but decided to keep the 4.1% base rate unchanged for a third time. The market, however, is still pricing in one more rate increase by early 2024. Still, the Federal Reserve's (Fed) hawkish monetary policy continues to exert downward pressure on AUD/USD.
AUD/USD was falling during the Asian and early European session but stayed above the important 0.63800 level. Today, traders await the publication of the Consumer Price Index (CPI) at 1:30 a.m. UTC. ‘The CPI print for August will likely show evidence of growing inflationary pressures stemming from high energy prices,’ said Tim Waterer, the chief market analyst at KCM Trade. If CPI is higher than expected, the probability of an additional rate increase from the RBA will rise, pushing AUD/USD higher—probably towards 0.64500. However, if the data comes out lower than expected, AUD/USD will likely drop below 0.63500, setting a multi-month low.