The USD is modestly lower vs the 3 major currency pairs. The AUDUSD is the biggest mover. | Forexlive
The USD is little changed vs the EUR (-0.05%), JPY (-0.17%), and GBP (-0.06%) to start the US trading session. The USD is also marginally lower vs the CHF and the CAD. The biggest move in the US morning snapshot is versus the AUD with the dollar higher vs that currency aftet the RBA cut rates by 25 basis points, but did talk of cutting by 50 basis points. That gave the sellers an incentive to push the pair lower.
IN summary, the Reserve Bank of Australia lowered its cash rate target to 3.85% from 4.10%, as expected, citing continued easing in inflation. While headline inflation may temporarily rise due to short-term factors, underlying inflation is forecasted to remain near the midpoint of the 2–3% target range. The RBA acknowledged ongoing global uncertainty stemming from tariff policy shifts and their potential impact on economic activity. Despite signs of recovery in private domestic demand and persistently tight labor market conditions, the Board views inflation risks as more balanced. With inflation now within the target band and upside pressures easing, the Board judged a rate cut appropriate to make policy less restrictive. However, it remains cautious and will closely monitor global and domestic developments to guide future decisions.
RBA Governor Bullock stated that the
Reserve Bank of Australia is prepared to take further rate actions if necessary, noting that price increases have slowed. She described the latest move as a confident rate cut and revealed that the Board discussed a range of options, including a 50 basis point or 25 basis point cut, as well as the possibility of holding rates steady. Ultimately, the consensus favored a 25bps cut, which she called the right move for now, although further adjustments remain on the table. Bullock noted that businesses are reporting margin pressures, and while there was some support for a larger 50bps cut, it was not the dominant view. She emphasized that it’s unclear whether this cut will lead to a longer series of reductions and clarified that the RBA does not endorse current market pricing, which anticipates around 55bps of cuts by year-end. Bullock added that if inflation continues to decline, it would create room for additional rate reductions.
In the video above, I take a look at the four currency pairs from a technical perspective to kickstart your trading day in the USD. What levels are in play and why. Be aware. Be prepared.
In other central banker talk:
- ECB’s Klaas Knot stated that the mid-term inflation outlook remains too uncertain to commit to a rate cut in June. While he acknowledged that upcoming ECB projections are likely to show lower inflation for 2025 and 2026, the long-term trajectory of inflation is unclear. This uncertainty is making it difficult to determine the appropriate course of monetary policy at this stage.
- ECB’s Isabel Schnabel commented that disinflation remains on track, but new external shocks are complicating the policy outlook. She noted that while tariffs could have a short-term disinflationary effect, they introduce upside inflation risks over the medium term. Schnabel also highlighted that the Euro’s recent appreciation presents a strategic opportunity to strengthen its role as a global currency.
- ECB’s Jose Luis Escrivá emphasized that the global financial environment is being shaped by heightened geopolitical tensions, evolving trade disputes, and increasingly unpredictable policy moves by the U.S. administration. He warned that these dynamics could pose risks to financial system stability. According to some scenarios, while higher tariffs may impact the U.S. more significantly, the Eurozone could also face secondary effects.
Meanwhile, BoE’s Huw Pill described his recent vote against an interest rate cut as a “skip” rather than a reversal, emphasizing it was part of a continued, cautious withdrawal of monetary policy tightening. He expressed concern over persistent inflation pressures, noting that the structural changes in wage and price-setting behavior have made inflation in the UK more stubborn. Pill argued that the current pace of quarterly 25 bps cuts, ongoing since last summer, is too aggressive given the risks to price stability and the strength of some pay indicators. While he believes the broader disinflation process remains intact and agrees with the Monetary Policy Committee’s (MPC) overall outlook, he advocated for a more measured approach to rate reductions. He stressed that future cuts should be cautious and not overly reliant on short-term data surprises, especially in a climate where new economic shocks could prolong inflation.
US stocks are lower with the futures implying:
- Dow Industrial average futures are unchanged versus the close
- S&P index futures are implying a decline of -8.85 points
- Nasdaq futures are implying a decline of -53 points
In the European markets, the major indices are higher at the start of the US session:
- German Dax, +.55%
- France’s CAC, +0.63%
- UK FTSE 100, +0.67%
- Spain’s Ibex, +1.52%
- Italy’s FTSE MIB, +0.72
In the US debt market, yields are marginally lower. Yesterday, yields moved higher at the start of the day on the back of the Moody’s downgrade, but reversed and closed little changed by the close.
- 2-year yield 3.968%, -1.5 basis points
- 5-year yield 4.068%, -1.4 basis points
- 10-year yield 4.469%, -0.6 basis points
- 30-year yield 4.939%, -0.1 basis points
In other markets:
- Crude oil down $0.16 or -0.30% at $61.95
- Gold is up $6.18 or 0.19% at $3236.41
- Bitcoin is trading dow, -$527 at $105,085
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