Aussie Rallies as RBA Holds Rates

AUD

The Reserve Bank of Australia concluded its monetary policy meeting earlier today and left interest rates unchanged at 1.50%. However, the bank downgraded the growth and inflation forecast. The 2019 growth forecast was revised lower to 2.75% from 3.00%, and the inflation estimates for both 2019 and 2020 were slashed by 0.25% to 1.75% and 2.00% respectively. The Australian dollar traded higher against rivals as the market was pricing in an interest rate cut by 25 basis points. The AUDUSD climbed to a one-week high of $0.7048, and the EURAUD tumbled to 1.5904.

USD

The dollar index which measures the greenback against a basket of major currencies drifted lower towards 97.38 as investors jumped into riskier assets. Investors rushed to dollar safety amid growing concerns over the trade clash between China and the United States following Trump's tweet. However, the fact that China will still hold trade talks this week pushed investors' sentiment back on track. Market participants await the release of JOLTS Job Openings which could give additional confirmation about the strength of the jobs market. The US 10-year yields dropped to 2.461%, the USDJPY tumbled to 110.65, and the EURUSD edged higher towards $1.1218.

Metals

Metals prices surged as the dollar weakened along with Treasury yields. The price of a gold ounce rose to $1284, the silver ounce climbed to $14.93, and palladium traded back above $1350.

Oil

Oil prices raced higher erasing the losses caused by the trade dispute between China and the United States. The US sanctions on Iran and Venezuela, and OPEC-Led supply cuts are still providing heavy support to prices. Moreover, the Trump administration is considering to impose further sanctions on Iran later this week. Iran responded with warnings to close the Strait of Hormuz where 90% of oil exports from the Persian Gulf pass through. The West Texas Intermediate crude futures rose to a high of $62.91, and Brent futures jumped to $71.78. In addition to any developments concerning US sanctions, market participants will be awaiting the release of the weekly Crude oil stock by the American Petroleum Institute.

Major Economic Events

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