**ASX Expected to Open Lower as Federal Reserve Faces Criticism Over Policy Choices**
*Based on material by William McInnes, The Australian Financial Review*
**Overview**
– The Australian share market is positioned to open lower as investors continue to digest the latest signals from global central banks and economists raise concerns over recent policy decisions by the United States Federal Reserve.
– Andrew Bessent, a noted market strategist, has publicly voiced criticism of the US Fed, suggesting that a series of questionable judgments have contributed to volatility in both equity and currency markets.
**Market Sentiment Going Into the Week**
– Futures trading indicates the S&P/ASX 200 will open weaker, mirroring losses seen on Wall Street and in other major equity markets.
– Major benchmarks such as the S&P 500 and the Nasdaq recorded declines in the last trading session, with investors expressing caution over further interest rate hikes, as well as uncertainties around inflation and economic growth.
– Australian market participants are closely monitoring the Reserve Bank of Australia’s upcoming policy decisions, with the global context playing a significant role in shaping expectations.
**Federal Reserve Under Scrutiny**
– Andrew Bessent has made pointed remarks regarding the Federal Reserve’s track record over recent quarters, alleging that poor decision-making has fueled market instability.
– Among the primary criticisms:
– Delays in responding to rapidly climbing inflation during the pandemic recovery.
– A lag in raising interest rates in a timely manner, which some argue allowed inflationary pressures to become embedded.
– Sending mixed or unclear guidance to the market, frequently shifting tone and projections, which has complicated pricing decisions across asset classes.
**Summary of the Fed’s Recent Policy Path**
– During the early stages of post-pandemic recovery, the Fed maintained a dovish stance, prioritizing economic growth and low unemployment.
– As consumer prices began to rise sharply from late 2021 into 2022, the Fed acknowledged inflationary risks but was slow to transition toward a tightening bias.
– When interest rate increases began, the speed and scale of hikes were unprecedented in recent history, leading to significant repricing of equities, bonds, and currency values.
**Implications for Currency Markets**
– The US dollar has experienced volatile swings as Federal Reserve policy evolved.
– Forex traders have had to contend with increased uncertainty, responding to each economic data release and central bank statement with heightened volatility.
– Currency movements have fed into global markets, putting added pressure on some emerging market economies and commodities reliant on a stable dollar value.
**Australian Dollar in Focus**
– The Australian dollar has traded in a relatively volatile range as global rate expectations fluctuate.
– Factors impacting the AUD include:
– Shifts in commodity prices, particularly iron ore and energy products.
– Perceived risk appetite, with the Australian dollar often seen as a proxy for global growth optimism.
– Divergence between Reserve Bank of Australia decisions and those of other major central banks, especially the Fed.
**What Market Professionals Are Watching**
– Interest
Read more on AUD/USD trading.