Australian Dollar Surges After RBA Rate Cut, Markets Await Key Data

Hello traders, and welcome to Tuesday. Today, markets should return to full volatility and liquidity, as U.S. traders are back after Monday’s holiday closure. Meanwhile, overnight, we had a major event from Australia, as the Reserve Bank of Australia (RBA) cut interest rates for the first time in over four years, reducing the cash rate by 25 basis points to 4.1%.

RBA Governor Michele Bullock stated that inflation is not fully under control, and that the market should not assume further rate cuts are certain. She also emphasized that the decision to lower rates was difficult, reflecting a cautious approach from the central bank. Interestingly, the Australian dollar reacted positively, strengthening sharply and making it the strongest currency on the market today.

The economic calendar remains busy, with several key releases ahead. The UK Claimant Count Change is expected at 10,000, followed by a speech from Bank of England Governor Andrew Bailey, which could influence sterling movement. Later, we have Canadian inflation data (CPI), expected at 0.1%, which will be crucial for the Canadian dollar.

On the currency market, the Australian dollar leads the way, while its usual counterpart, the New Zealand dollar, is underperforming, which is surprising given their typical correlation. The Japanese yen is also losing ground, while the U.S. dollar and Canadian dollar are showing strength.

In commodities, metals are performing well, with gold and silver attempting to climb higher. Oil is also trying to extend its gains, after starting the week on a positive note.

Turning to indices, there were no major moves on Monday, but the general sentiment remains positive. Major indices continue to trade at or near all-time highs, and despite persistent calls from bears expecting a market reversal, indices remain in bullish territory, showing no signs of slowing down.

With strong price action in currencies, commodities, and indices, today’s session promises plenty of trading opportunities as markets digest key data and return to full volume trading.

Source: https://www.axiory.com/analytics/market-news/australian-dollar-surges-after-rba-rate-cut-market