ASX set to open higher; Aussie dollar keeps climbing

Minutes from the Fed gathering earlier this month indicated several officials backed the need to moderate the pace of rate hikes, even as some underscored the case for a higher terminal rate. This adds weight to expectations the central bank will raise rates by 50 basis points next month, ending a run of jumbo 75 basis point increases.

“It was the start of a more different and dovish narrative from the Fed,” said Sunaina Sinha Haldea, global head of private capital advisory at Raymond James. “Is it a pivot? No, but are we seeing a slowdown in rate hikes and that path downwards towards rate cuts coming through? Yes. I think we will look back and say this was the peak of it.”

“A few” ECB officials favored a smaller increase in interest rates in October to tackle record inflation, an account of their last meeting showed. Those who preferred a less aggressive step cited the fact that the hike was accompanied by other monetary-tightening measures, according to the account, published on Thursday.

Oil slipped as the European Union considered a higher-than-expected price cap on Russian crude and signs of a global slowdown increased.

Meanwhile, Bank of America said its private clients are flocking to bonds and out of stocks amid fears of a looming recession. Bond funds attracted inflows for a 39th straight week, strategists led by Michael Hartnett wrote in a note. The strategists favor holding bonds in the first half of 2023, with stocks becoming more attractive in the last six months of next year.

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“We stay bearish risk assets in the first half, set to turn bullish in the second half as narrative shifts from inflation and rate ‘shocks’ of 2022 to recession and credit ‘shocks’ in the first half of 2023,” the strategists wrote.

Gold rose for a third day on the Fed minutes. The precious metal has been hurt by the US central bank’s aggressive monetary-tightening policy to curb inflation, which has pushed up bond yields and the dollar and in turn sent bullion tumbling about 16 per cent from its March peak.

with Bloomberg

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