RBA

The RBA is holding firm on rates, but with inflation concerns still high and the US election looming, what’s the next move for the Aussie dollar? As bonds take a beating and AUD/USD edges higher, here’s how both domestic policy and global events could shape the outlook.

The Reserve Bank of Australia (RBA0 is expected to keep the cash rate at 4.35% for eight straight meetings.

Underlying inflation remains uncomfortably high in Australia. With continued strength in hiring keeping labour market conditions tight, it means the prospect for RBA rate cuts in 2024 is now remote. For AUD/USD and AUD/JPY traders, external factors are likely to dictate direction from now until year-end, especially the Federal Reserve rates outlook and US election.

Australia’s Q3 inflation report is the sole remaining domestic data release that could meaningfully influence the outlook for interest rate settings from the Reserve Bank of Australia (RBA) this year, making Wednesday’s report a key event for AUD/USD and ASX 200 SPI futures traders.

AUD/JPY looks to Wall Street for its next directional move while NZD/USD is down for a fifth day ahead of tomorrow's RBNZ meeting. But if they fail to deliver a dovish 50b cut, it could prompt profit taking from bears and weigh further on AUD/NZD.

An upside surprise on ISM services helped slow the bleeding on US stock markets and AUD/USD erase heavy losses ahead of todays RBA meeting. Nikkei futures rose 6% after its 12% plunge, which brings hopes for a bounce on the ASX 200 today.

Two RBA speeches and a monetary policy decision along with updated RBA forecasts are the highlights of the week for AUD/USD traders on the domestic front. Although risk-off tones and an ISM services report could prove to be the bigger drivers.

It has been another volatile week for traders thanks to weaker US economic data, a dovish Fed and a refreshingly hawkish Bank of Japan. ISM services is a key event from the US next week, but apart from that it is mainly second-tier data from the APAC region. And that means appetite for risk might be the main driver for markets next week. But given the larger moves already seen, we may need to lower out expectations for volatility unless a fresh catalyst arrives.

The performance of mainland Chinese stock indices and minutes from the RBA May monetary policy meeting should be on the radar for anyone trading AUD/USD or ASX 200 futures on Tuesday. With little top tier data or event risk to navigate, they loom as the most likely drivers of Australian financial markets.

With unemployment spiking and broader measures of labour market slack increasing, the risk of strong wages growth sparking renewed inflationary pressures looks to have past.

The Reserve Bank of Australia (RBA) kept Australia’s cash rate unchanged at 4.35% in May but refrained from increasing its longer-term underlying inflation forecasts, limiting the risk of a near-term interest rate hike.

Stickiness in services and domestic inflation, accompanied by continued resilience in labour market conditions, points to the likelihood of the RBA striking a more hawkish tone in its May monetary policy meeting, creating upside risks for the Australian dollar

With no imminent reason for the RBA to hike or cut, the 4.35% cash rate seems here to stay. But the removal of their slight tightening bias weighed on AUD/USD.

It is a monster week ahead for traders with a key focus on central banks, with BOJ, Fed, BOE and RBA meetings on the menu.

AUD/USD could be susceptible to movement from minutes of the recent FOMC and RBA meetings. But with Australian unemployment data hitting a three-year high, a softer set of wage figures could bring forward bets of a rate cut.

The RBA continues to see the risk that rates may increase again despite delivering updated forecasts showing faster progress in bringing inflation back to within its target band. For AUD/USD traders, there was more interest in the rally in Chinese stocks and currency than what the bank had to say.

Bargain hunting by cost conscious consumers saw Australian retail sales volumes accelerate slightly in the final three months of 2023, reducing the risk of a negative growth when the December quarter national accounts are released in early March.