Author: Rhys Miles
The financial markets were eerily quiet last night despite a back drop of a hugely fluctuating oil price and Middle East tensions because of talk of a war with Iran. The bigger news story or at least the one with the potential to have far greater influence is the US Fed meeting tonight and their decision early tomorrow morning our time on interest rates. A rate cut of 25 points is a foregone conclusion but their accompanying commentary or guidance is where the market will be looking for clues if not confirmation that expectations of four further rate cuts over the next twelve months is not unfounded.
Locally, yesterday’s RBA minutes were a little more dovish than expected reinforcing the chances of at least one cut this year and slightly heightening the possibility of two. Their usual terminology of “spare capacity” and low interest rates “for an extended period” weighed on the AUD with it losing 30 points quite quickly at the time of the release. The AUD/USD continues to trade within the same tight band that we have seen for many weeks now and it remains to be seen whether the US Fed decision will see it move out of that range.
Not much data elsewhere to provide any impetus today.
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