RBA’s FSR: Australian financial system resilient, risks contained

Dhwani Mehta FXStreet

In its semi-annual Financial Stability Review (FSR) published on Thursday, the Reserve Bank of Australia (RBA) said that “the Australian financial system resilient, risks contained.”

Additional takeaways

Risks include stress in china's financial sector, lack of significant response from Beijing.

Low global risk premia, high leverage increase danger of disorderly downturn in global asset prices.

Financial system vulnerable to digitalisatiion, concentration of ai/cloud providers.

Growth of superannuation to one quarter of financial system could amplify shocks.

Risk of widespread financial stress in australia remains limited.

Small but rising share of australia home borrowers falling behind on payments.

Only around 2% of all owner-occupier borrowers in real danger of defaulting.

Less than 1% of owner-occupier loans more than 90 days in arrears.

Around 0.5% of home loans in arrears estimated to be in negative equity.

Vast majority of borrowers expected to be able to continue servicing debt.

Sees risk households could take on excessive debt once interest rates fall.

Australian banks well capitalised, profitable and have low exposure to bad debt.

Strengthening operation resilience of banks a priority for regulators.

Market reaction

AUD/USD was last seen trading 0.18% higher at 0.6835, underpinned by the encouraging FSR report.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.