The RBA raised its interest rate by 0.25% as widely expected, and the Australian Dollar firmed slightly on the news.
- The Reserve Bank of Australia raised its Cash Rate by 0.25% to 4.10%, which is now the highest interest rate at any of the major central banks. The hike was expected, so it caused only a minor firming of the Australian Dollar, which seems to have partially shed its status as a risk barometer over recent months. The Australian Dollar has shown a lot of long-term strength lately, and this is likely to remain.
- Canadian CPI (inflation) data released yesterday came in slightly lower than expected, showing a month-on-month increase of only 0.5% while an increase of 0.7% was the consensus forecast. The Loonie softened a little bit as a result with the Bank of Canada's inflation target of 2% now closer to fulfilment, but the reaction was very muted.
- The US/Israel vs Iran war continues with the only major new development being President Trump calling the world's bluff over the Strait of Hormuz. The closure of the Strait does not directly affect the USA, so President Trump suggested more affected nations form an armada to open the Strait with help from the USA, and it seems the global response has been underwhelming to say the least. WTI Crude Oil has formed slightly, possibly as a result, finding support at $94, and its short-term price action looks bullish. The Israeli government yesterday signaled to its public that the war will likely continue for another four weeks, and President Trump yesterday signaled that the war is not about to halt in the very near future, although he promised its time frame will be relatively short.
- US policymakers are now beginning to weigh the impact of the strong rise in the price of Crude Oil over the past weeks and see the potential for new upwards pressure on global inflation as likely to feed through. This has led markets to revise downwards their expectation for Fed rate cuts this year in the USA and has now arrived at the point where no rate is now expected over the rest of 2026, which is boosting the US Dollar. This means we can probably expect continued strength in the greenback, with the CME FedWatch tool suggesting only a 47% chance of a rate cut in 2026.
- In the Forex market, the strongest major currency since today's Tokyo open has been the Australian Dollar, while the weakest has been the New Zealand Dollar. The USD/JPY currency pair has enjoyed a significant bullish breakout, but has not yet tested the big round number at 160, and is currently making a minor bearish retracement.
- Wheat futures made a strong bullish breakout earlier this week, reaching a new 1.5-year high price, Trend traders mostly went long of wheat. If you want to do that but can't afford the expensive Wheat futures, there is a Wheat ETF called WEAT that could give you exposure to the grain. Another commodity which has recently made new highs is Aluminium, which can be traded in large-sized futures or as a more affordable ETF (ALUM).
- There are no major economic data releases scheduled today.