Tuesday Kickoff: Aussie Dollar Pops, Indices Rebound, Tariffs Loom

The day kicked off with a surprise from the Reserve Bank of Australia. While most traders and analysts were positioned for a 25 basis point rate cut, the RBA decided to hold rates steady at 3.85%. This unexpected move immediately strengthened the Australian dollar, making it the strongest currency in the basket so far today. The New Zealand dollar initially followed with some gains of its own, but those were largely short-lived — quickly retracing, suggesting the move was more sympathy than substance.

Aside from that, today’s economic calendar is relatively light. The one item left to watch is Canada’s Ivey PMI, which is expected at 49.1. That figure hovers right at the edge of contraction territory, but unless there’s a big surprise, it’s unlikely to shift market sentiment significantly.

What is moving sentiment, however, is trade policy. Donald Trump announced a new round of steep tariffs targeting 14 countries, set to take effect on August 1st. These measures are aimed at countries he accuses of aligning with anti-American economic policies, particularly those leaning toward the BRICS bloc. Japan has already weighed in, calling the move “regrettable,” and markets are beginning to digest the possible implications of another trade war brewing on the horizon.

Despite the geopolitics, equity markets are holding up. European indices are pushing higher, with the DAX and EuroStoxx 50 finally showing some strength and attempting to catch up with US equities. American indices had a rough day yesterday, closing lower, but during the European open this morning they’re attempting a rebound, hinting that the dip may be getting bought.

In commodities, gold is trying to hold onto Monday’s rebound. The yellow metal started the week on the back foot, with bearish price action in the first half of Monday’s session. But in the second half of the day, gold reversed strongly and is now sitting more or less flat for the week. Other metals haven’t shown the same resilience. Copper, for example, remains under pressure and is currently down about 2% over the past two trading sessions, with little sign of recovery so far.

Source: https://www.axiory.com/analytics/market-news/tuesday-kickoff-aussie-dollar-pops-indices-rebound