RBA’s Caution Weighs on AUD and NZD, USD Dominates

Good morning, traders! As we dive into Tuesday’s market activities, let’s start by examining the key events on the calendar. Today, we anticipate the CPI Flash Estimate from the Eurozone, with expectations set at 2.5%. Later, Jerome Powell will deliver a critical speech, followed by the JOLT’s job openings data, projected to come in just under 8 million. 

Earlier today, the Reserve Bank of Australia released its monetary policy meeting minutes. The minutes reflected the board’s concerns about inflation, highlighting the need to monitor inflation expectations closely, and suggested that while the case for steady rates was strong, vigilance against upside risks remains crucial. The board also pointed to potential weaknesses in the labor market, noting that unemployment could rise rapidly. These insights have significantly impacted the Australian and New Zealand dollars, which are now the weakest currencies, while the US dollar leads the pack in strength.

Shifting our focus to commodities, we see contrasting movements. Precious metals started the day with slight drops, indicating a cautious stance among traders. In contrast, oil continues to perform robustly, pushing higher and achieving new long-term highs. This divergence highlights the varied sentiment across different asset classes. The indices, however, have shown mixed performance over the past two trading days. Despite significant volatility, there has been no clear directional move, with prices remaining relatively flat. Investors seem to be waiting for more definitive signals before committing to a trend.

On the forex front, the USD has emerged as the strongest currency, while the AUD and NZD are under pressure following the RBA’s cautious outlook. In commodities, oil stands out with its continued rise, setting new highs, whereas precious metals face bearish pressure. Indices are in a holding pattern, showing volatility without a clear direction. As we move through the day, all eyes will be on the upcoming economic data and how it shapes market sentiment. Stay tuned and trade wisely!

Source: https://www.axiory.com/analytics/market-news/rba-s-caution-weighs-on-aud-and-nzd-usd-dominates