In the European session, the main event was the RBA policy decision. The central bank cut interest rates by 25 bps as expected but delivered some dovish messages. The RBA emphasised growth risk caused by trade policies and revised growth and inflation forecasts lower.
The AUD got pushed lower after the release but started to recover most of the losses before RBA’s Govenor Bullock mentioned that they did discuss a 50 bps cut. That pushed the Aussie dollar to new lows before another bounce as the following comments struck a more neutral tone.
In the American session, we have the Canadian CPI report where the Trimmed Mean Y/Y is expected at 2.9% vs. 2.8% prior and the Median Y/Y is seen at 2.9% vs. 2.9% prior. The market is pricing a 62% chance of a 25 bps cut at the upcoming meeting and a total of 47 bps of easing by year-end. A higher than expected reading could see the market put aside a rate cut at the upcoming meeting.
We will also have some more Fedspeak and the focus will be on potential hawkish comments as the market is now back at pricing just two rate cuts in 2025. From now on, we will either price in more cuts or less cuts than expected and that will move markets.
Central bank speakers:
- 08:00 GMT/04:00 ET – BoE’s Pill (hawk – voter)
- 10:00 GMT/06:00 ET – ECB’s Cipollone (dove – voter)
- 10:00 GMT/06:00 ET – ECB’s Knot (neutral – voter)
- 13:00 GMT/09:00 ET – Fed’s Bostic (hawk – non voter)
- 13:00 GMT/09:00 ET – Fed’s Barkin (neutral – non voter)
- 13:30 GMT/09:30 ET – Fed’s Collins (neutral – voter)
- 17:00 GMT/13:00 ET – Fed’s Musalem (hawk – voter)
- 21:00 GMT/17:00 ET – Fed’s Kugler (dove – voter)
- 23:00 GMT/19:00 ET – Fed’s Daly (neutral – non voter)
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