Australian Dollar: RBA policy pause maintained – TD Securities

FXStreet Insights Team FXStreet

TD Securities strategists expect the Reserve Bank of Australia (RBA) to leave the cash rate unchanged at 4.35%, noting that policy is already restrictive and that Australian activity, particularly housing, is slowing in response to earlier hikes. They highlight that lower-than-expected Q2 trimmed mean Consumer Price Index (CPI) allows the RBA to pause in August, while also expecting only limited changes to inflation forecasts despite elevated Oil prices.

RBA seen holding policy steady

"The RBA is in pause and observe mode as 1) policy is viewed to be restrictive, 2) activity (especially housing) is slowing in response to earlier hikes, and 3) the full impact of earlier hikes is yet to be felt."

"Lower-than-expected Q2 trimmed mean CPI gives the RBA space to pause at the August meeting, with OIS markets pricing close to 0% odds of a hike."

"We also get new economic forecasts in the August Statement of Monetary Policy, but we doubt the RBA would downgrade its inflation forecasts sharply amid heightened inflation risks from elevated oil prices."

"We expect the RBA to keep the cash rate at 4.35% (consensus: 4.35%)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD flirts with four-week highs past 1.3500

GBP/USD advances modestly at the beginning of the week, managing to surpass the key 1.3500 threshold. A modest rebound in the Greenback accompaniees Cable’s uptick amid persistent uncertainty lingering over the reopening of the Strait of Hormuz and US-Iran talks.

EUR/USD treads water around 1.1550

EUR/USD trades in a narrow range around 1.1550 of Monday. The pair’s inconcluisve price action comes as investors continue to assess Friday’s disappointing US jobs data in a context where renewed tensions in the Middle East lend decent support to the US Dollar.

Gold holds firm as Fed rate outlook, Middle East developments remain in focus

Gold (XAU/USD) holds firm on Monday as buyers take a breather following last week’s sharp rally, with the broader market theme still centred on the Federal Reserve’s (Fed) interest-rate outlook and developments in the Middle East. At the time of writing, XAU/USD trades around $4,333, little changed on the day.

Pi Network: Mild bearish bias caps PI corrective rebound

Pi Network extends losses Monday after a bearish close the previous day, as price remains capped below the $0.1000 psychological threshold. Speculative demand for PI is low, with Open Interest holding above $9 million as broader market sentiment improves. The technical outlook for PI indicates a mild bearish bias as the $0.0961 resistance level remains intact.

US Payrolls miss – RBA on deck tomorrow

It would be remiss of me not to kick off this morning’s report with a rundown of last Friday’s US jobs report, which was a belter. Headline payrolls fell by 23,000, versus expectations of an 80,000 gain. The BLS noted that May was revised down by 66,000 (from 129,000) and June by 37,000 (from 57,000), resulting in combined May-June revisions of 103,000 lower than previous reports.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.