- AUD/USD remains stuck in a range as RBA signals a pause and US-Iran stalemate extends
- US futures keep steadier after the drop yesterday
- Indian Rupee flirts with new record lows as US-Iran stalemate extends, tensions rise
- USD/JPY treads with caution amid fear of incurring another intervention hit
- Oil prices stay elevated amid rising tensions in the Strait of Hormuz, US-Iran stalemate
- Gold’s outlook remains neutral-to-bearish amid prolonged US-Iran stalemate and neutral Fed
- Switzerland April CPI +0.6% vs +0.6% y/y expected
- What are the main events for today?
- Iran parliament speaker says US has jeopardised shipping security through Strait of Hormuz
- FX option expiries for 5 May 10am New York cut
- RBA governor Bullock: We must get on top of inflation now before it gets away from us
- RBA raises cash rate to 4.35% in May monetary policy meeting, as expected
It’s been a rather uneventful session with mostly rangebound price action. The main highlight was the RBA policy decision where the central bank hiked the Cash Rate to 4.35% as widely expected but adopted a more neutral guidance.
In fact, the central bank added in the statement the key passage “having raised the cash rate three times, monetary policy is well placed to respond to developments, and the Board is focused on its mandate to deliver price stability and full employment”.
The RBA has also revised its forecasts for the Cash Rate by matching the market expectations of two more rate hikes by year-end. Governor Bullock doubled down on the neutral tone as she stated that “the cash rate level is now a bit restrictive” and “that gives us space to see how the conflict plays out”. Finally, she added that “with this rate hike, we have space to sit and see what happens”. The market pared back some of the hawkish bets and it now sees the next rate hike coming in September at the earliest.
In terms of economic data, we had the Swiss CPI report. Headline CPI Y/Y came out as expected at 0.6% but the core annual metric eased further to 0.3% vs 0.4% in the prior month. The data didn’t change anything for the SNB as the central bank has all the reasons to look through this energy supply shock.
The most notable mover in the market was the Japanese yen as it slipped further against the US dollar, with the USD/JPY pair breaking out of the recent range that was capped by Japan’s interventions.
This article was written by Giuseppe Dellamotta at investinglive.com.
