Central Bank

Two RBA speeches and a monetary policy decision along with updated RBA forecasts are the highlights of the week for AUD/USD traders on the domestic front. Although risk-off tones and an ISM services report could prove to be the bigger drivers.

While the BOJ hiked more aggressively than expected, they fell short on their ETF tapering, rattling the yen during a bout of 2-way volatility. And the risk of volatility remains with a looming FOMC meeting.

Harris replacing Biden may not be a radical overhaul where policies are concerned, but it has certainly brought the Democrat’s prospects for maintaining power back from the brink of death. From a market perspective, it means Trump is no longer a ‘walk in’ President, and political headlines from the US are no longer driving sentiment for now. Thankfully, we have intertest rate decisions from the FOMC, BOE and BOJ to drive sentiment, along with NFP and Australia’s CPI report for good measure.

Traders will keep a close eye on the outcome of the second round of the French elections at the Asian open next week, as it could have a direct impact on European markets. Given that the far right failed to secure a majority government, there are upside risks for the euro if they do not perform as well as currently expected. Jerome Powell will also address the Senate Banking Committee ahead of a key inflation report next week. Both events have the potential to shape policy expectations for 2025. NZ dollar traders should closely monitor the RBNZ meeting to see if they maintain the hawkish stance that surprised markets in their prior meeting.

Concerns that headline employment figures could be lagging a worse picture alongside a lack of updated service inflation figures prompted the RBA to hold rates in June. And that makes the quarterly CPI report in a few weeks all the more important.

Futures traders may be heavily net-short Swiss Francs, but the rapid rise of the currency this week ahead of the SNB meeting suggests some are wary of being caught short a less-dovish central bank.

Traders are clearly keeping a close eye on the 158 handle after USD/JPY spiked up to it. Note that we're yet to see a daily close above 158 since late April, which landed one day before the MOF first intervened this year.

For the first week in a while, US data is not dominating the market focus. With a key US inflation report and FOMC meeting freshly in the rear-view mirror, markets can now shift attention to domestic data. Three top-tier central banks meet next week, including the RBA on Tuesday, followed by the Swiss National Bank (SNB) and Bank of England (BOE) on Thursday. UK inflation data on Wednesday could set the tone for what to expect at future BOE meetings. Flash PMIs across Asia, Europe, and the US then close out the week, which can shape expectations for future growth and inflationary pressures.

Stronger US growth and similar inflation on both sides of the Atlantic could lead to more aggressive interest rate cuts from the ECB, boosting EUR/USD.

With a soft landing assumed, AUD/USD could rise in 2024, but we're not necessarily expecting runaway gains...

Major central banks may switch gears in 2024 amid the weakening outlook for global growth accompanied by signs of slowing inflation.

This explainer looks at what determines financial conditions, the impact they have on markets and the real economy, along with the indicators you can watch to monitor how they’re evolving.

Four major central banks meeting next week including the FOMC, ECB, BOE and SNB. While no changes are expected, traders want to know who may be the first to cut rates.

Why the US dollar could benefit from fewer rate cuts than expected following a relatively quiet 2023...

We have a busy calendar with what would usually be ‘red flag’ days, including central bank meetings with the FOMC, BOJ and BOE. There’s a reasonable chance we’ll see no action across all three, but the bigger response for global markets could be if the BOJ widen or abandon their yield curve control (YCC).

The hawkish tone of the RBA’s October monetary policy minutes has caught markets by surprise, seeing the AUD pop higher against the USD and crosses.

NZD/USD's break above 60c ahead of the RBNZ's announced that they held rates at 5.5% again was shortly lived, and momentum has turned decisively lower. Ans there could be further downside to come.