AUD on edge ahead of RBA at 2.30pm AEST
The Australian dollar was higher overnight ahead of today’s all-important Reserve Bank of Australia decision.
The decision is on a knife’s edge. Since May last year, official rates have been lifted on 12 occasions, with the RBA declining to raise rates at only one meeting since then —in April this year.
According to Reuters, 16 out of 31 surveyed economists are looking for the RBA to lift rates. The other 15 are calling for the RBA to hold rates steady.
In terms of market pricing, there is a 37% probability of a 25-basis point hike to 4.35%, while no change is seen as a 63% chance (source: Refinitiv).
The AUD/USD gained 0.1%. The Aussie was higher in most other markets.
USD weaker after manufacturing PMI
Otherwise, financial markets were more muted, with US markets quieter ahead of tonight’s Independence Day national holiday.
The US dollar was mostly lower after the Institute of Supply Management manufacturing PMI fell from 46.9 to 46.0 in May.
However, while growth slowed, so did inflationary pressures, with prices paid dropping from 44.2 to 41.8, the lowest since December last year.
The USD/SGD fell 0.1% and the USD/CNH lost 0.2%.
The NZD/USD was the best performer with the pair up 0.4%.
FX markets on intervention watch
FX markets are also watching for any potential intervention most notably in the USD/JPY as the pair again neared the important 145.00 level.
Japan’s Ministry of Finance said on Friday it would take “appropriate steps” if the JPY became excessively weak, the latest in a sequence of warnings from Japanese authorities.
The MoF intervened in FX markets in September after the USD/JPY moved above 145.00.
Japanese authorities again intervened in markets after the USD/JPY moved above 150.00 in September in a move that called an end to the USD’s massive run last year.
Japan is not alone is raising concerns over its weakening currency.
The Chinese yuan has also seen authorities push back on recent weakness after People’s Bank of China set a stronger CNY fix last week and reportedly instructed state banks to sell dollars to moderate the CNY’s recent weakness.
Aussie higher ahead of RBA
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 3 – 7 July
All times AEST
Have a question?[email protected]
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
