RBA in dovish raise, US elections in focus
RBA did indeed raise rates 25bps to 4.85% as expected but there was certainly a less hawkish feel to the meeting. Voting was 6-3 in favour of the rise, that’s closer than we’d thought which goes some way to show the division in thinking between RBA members, with some worrying more about downside economic and employment risks. RBA expects inflation to hold above 3% for much of next year which does raise the potential for another rate rise, but the bar may be high. AUD has weakened, with GBPAUD now around 1.9215 and AUDNZD down to 1.2400.
News overnight of US military strikes on Iran saw oil prices recover from yesterday’s lows. Trump had said he’d prefer a diplomatic solution which saw oil lower but as I type we are $2-3 off those lows. Still, these are reported to be limited self-defensive strikes rather than the all out attacks we fear may come after the midterm elections, as such oil’s move higher as been capped and still some $6-8 off last week’s highs.
GBPUSD is holding above 1.3400, now 1.3420 while EURUSD is around 1.1200. This leaves GBPEUR at 1.1985, GBP given a bit of support on the news UK and EU have agreed to scrap post- Brexit food export red tape. On the subject of food, many supermarkets across Europe have been hit by what appears to be a cyber-attack which warmed them up by putting them into defrost mode. This is similar to the issues in France in October that led to millions of Euros worth of food being thrown away. I’ve never really seen the point of internet-enabled appliances but I never really thought anyone would bother hacking a fridge!
Mid term elections in the US today will give the world a glimpse of how the US view Trump’s Presidency, with the country struggling with high cost of living, high inflation and possibly higher interest rates. First results are likely to come in around midnight but in reality we may not know the full outcome for a few days.
Champions league action this evening sees Aston Villa take on Barcelona. Villa have won all three matches in the tournament so far but Barcelona are likely to offer a tougher test. Struggling Man Utd face Roma who are currently sitting third in the Italian Serie A. Could be another difficult night for Carrick.
US JOLTS job data this afternoon, and NZ employment numbers overnight likely to be the main events today. Therer is some hope the NZ unemployment rate will tick down to 5.5% but risks must surely be for a worse reading. 20 pips or so could buy the overnight AUDNZD 1.2425 call just in case.
Have a great day…
- 15.00 US factory orders, JOLTS
- 16.00 BoCs Macklem speaks
- 18.00 ECBs Nagel speaks
- 18.15 ECBs Sleijpen speaks
- 21.45 NZ unemployment
- 22.00 AUS S&P services PMI