Author: Rhys Miles
A cautious decline overnight in the fear and volatility experienced the previous two sessions has seen a rebound in US equities with the Dow up 1.20% and the AUD/USD up only slightly as global growth concerns naturally dominate the global markets considerations. Nonetheless, a tempering in some of the language being conveyed between the US and China has offered a little hope overnight. The threat of a currency war in addition to the trade war between them is still of paramount concern.
The RBA yesterday unsurprisingly left rates on hold. Their accompanying comments that they would “ease monetary policy further if needed” also acknowledging spare capacity and sluggish price pressures in the economy kept a lid on the AUD with that recurring theme having the markets pricing in a further rate cut in October. On the cross rates the AUD fared poorly overnight with safe haven buying of Yen, Euro, Swiss Franc and even the NZD enjoying a bounce the Australian dollar is flat at best.
The RBNZ today are also fully expected to maintain the global rate cut trend and drop to a new low of 1.25%. This, despite their economic indicators being some of the strongest in the world.
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