RBA Scraps Talk of Rate Cuts
AUD
The Aussie Dollar opens mostly down against the majors after the RBA decided to hold the Cash Rate at 4.35% yesterday, notably removing all talk of potential future interest rate increases in the RBA Rate Statement. Although the hold was expected, Michelle Bullock's RBA Press Conference comments sparked interest. Her tone during the Q&A part on the forward guidance change was the most telling. She stuttered a bit in trying not to explicitly mention that they are ruling out rate hikes, instead opting to say 'certain interest rate changes'. It's clear they are moving towards interest rate cuts, although trying not to be too outspoken. Many are expecting the central bank to wait for further signs of slowing inflation before cutting interest rates later this year. Commodities also came through mostly down with Copper -1.5%, Iron Ore -0.4%, Silver -0.1%, and Gold flat. Asian equities saw a mixed performance with the ASX +0.4%, Shanghai Comp -0.7%, and the Nikkei +0.7%. A quiet day for Aussie releases, however, we have the 1-y and 5-y Loan Prime Rate set for release out of China at 12:15pm. The rates are widely expected to be held at 3.45% and 3.95% respectively, underscoring authorities' emphasis on maintaining currency stability. Looking at tomorrow, all eyes will be focused on Australia's Employment Change, and Unemployment Rate.
USD
The AUDUSD coupling rallied overnight after the RBA’s decision to hold rates saw the AUD weaken, with the pair hitting three-week lows of 0.6504 before readjusting and opening this morning at 0.6530, being lower than yesterday's open. Wall Street closed in the green with the Dow Jones +0.8%, S&P 500 +0.5%, and the NASDAQ +0.4%. Tomorrow morning we'll see the US Federal Reserve announce their rate decision. The central bank is expected to hold at 5.50%, however, the market is likely to respond to any shifts in the FOMC Statement as well as language or rhetoric in Fed Chair Powell’s Press Conference. Particular attention will be paid to the timing of potential rate cuts, the central bank's quarterly economic projections and individual Members' dot plot projections of future interest rates.
EUR
The AUDEUR readjusted overnight, briefly losing the 0.60 handle after the release of some well-performing German and Eurozone ZEW Economic Sentiment data before gaining traction early this morning to open at 0.6011. Eurozone equities closed in the green with the DAX +0.3%, and CAC +0.6%. Looking at Eurozone news, we will have some minor data releasing with German Buba President Nagel Speaking, German PPI m/m, however the main focus will be on European Central Bank President Lagard speaking at the ECB this evening.
GBP
The AUDGBP couple opens lower this morning at 0.5122, having reached 0.5155 highs in yesterday's session before falling off in the aftermath of the RBA's Press Conference. Looking at UK equities, the FTSE closed in the green +0.2%. This evening will bring February's inflation data from the UK, with the headline figure expected at +3.5% y/y, decelerating from the previous +4.0% print. This inflation print is however unlikely to significantly impact the outcome of the Bank of England meeting tomorrow, with the market expecting the Monetary Policy Committee to keep its policy rate on hold at 5.25%.
NZD
The AUDNZD opens higher this morning at 1.0789 after a busy night of data releases from our Kiwi neighbours. We saw the NZ GDT Price Index come through lower than previous at -2.8%, while there was an improvement on the Westpac Consumer Sentiment, coming through at 93.2 and Current Account balances. No further releases for the day, however, tomorrow morning we have the release of the GDP q/q.