The AUDUSD opens higher at 0.6977 , and the NZDUSD opens higher at 0.6598 this morning.
Australian Retail Sales will hit the wires at 11:30am AEST. However, the major focus today will be on the Reserve Bank of Australia interest rate setting meeting at 2:30pm – they are almost universally expected to lower the Cash Rate by 0.25% to a new record low of 1.25%. The markets widely anticipate a further rate cut by September and possibly a third by Christmas – it will be interesting to whether the RBA statement reinforces these expectations.
The USD has been under selling pressure, pushing the AUD/USD and NZD/USD higher, after data shows factory activity in the US slowed. Such growth indicators are likely to deteriorate further as trade tariffs weigh on global commerce and hinder business and consumer sentiment. This, in turn, has raised expectations the US Federal Reserve will lower interest rates in the coming months and please President Trump in the process.
The US interest rate market has now priced in excess of 0.75% of rate cuts over the next 12 months. If seen, this is will place significant downwards pressure on the USD.
Global trade tensions remain elevated. The US has threatened to raise tariffs on Mexican imports, unless they control illegal immigration into the US, and remove preferential trade treatment for India. This is on top of increased tariffs on Chinese imports.
Global equity markets were mixed on the day - Dow -0.3%, S&P 500 -0.6%, FTSE +0.3%, DAX +0.6%, CAC +0.7, Nikkei -1.0%, Shanghai -0.3%.
Gold prices jumped 1.1% to a 3-month high of USD$1,326 an ounce. WTI Crude Oil prices dropped 1.3% to US$52.80 per barrel.
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