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2025-10-28 14:14:40
Commodity Currencies Stabilize, Boosted by Trade Optimism] 1. The Australian and New Zealand dollars remained stable on Tuesday, benefiting from positive signals regarding progress in global trade negotiations, which boosted market risk appetite. Meanwhile, expectations of a near-term rate cut by the Reserve Bank of Australia (RBA) receded, pushing Australian government bond yields higher. 2. RBA Governor Michelle Bullock downplayed the impact of the sharp rise in unemployment and emphasized the central bank's cautious stance on monetary policy. This forced the market to lower expectations for easing policy. Bullock also noted that a CPI increase of 0.9% would deviate significantly from the RBA's 0.6% forecast. 3. Analysts expect the trimmed mean CPI to rise by 0.8%, maintaining year-on-year inflation at 2.7%. A higher increase would push inflation away from the RBA's midpoint of its 2%-3% target by 2.5%. 4. NAB's Head of Australian Economics, Gareth Spence, stated that the November meeting is expected to remain unchanged, and that the RBA needs time to rebuild confidence in inflation stabilizing around 2.5%. He predicts that the core CPI will rise by 0.9% in the third quarter, and believes that the unemployment rate will peak at 4.5% in September as consumer demand recovers. 5. The market currently expects the probability of the Reserve Bank of Australia cutting interest rates by 25 basis points at its meeting on November 4 to be about 40%, down from 60% on Monday morning. One rate cut is still expected by February next year. Three-year Australian government bond futures fell 4 points to 96.540, with a yield of 3.46%. 6. AUD/USD is currently stable around 0.6555, up 0.7% overnight, breaking away from the low of 0.6438, but facing resistance at 0.6628. NZD/USD rose slightly to around 0.5775, up 0.4% overnight, with a high of 0.5794, and resistance at 0.5808 and 0.5844. Investors expect the Reserve Bank of New Zealand to cut interest rates by 25 basis points in November, and the possibility of a 50 basis point cut has been basically ruled out.
