Quiet Trading Day to Kick Off the Week
As expected, it was a quiet trading day to start the week yesterday, with very little on the macroeconomic front, a slow geopolitical day, and holidays in the U.S. and Canadian markets. European stocks, however, perked up nicely during the day, with the DAX notching a new record. The dollar had a quiet session, as did other major currencies, with the DXY remaining near annual low levels, although it did push slightly higher on the day, up 0.05% to 106.76.
Oil prices experienced some volatility after a drone strike in the Caspian Sea region, with Brent rising 0.74% to $75.29 and WTI up 0.92% to $71.39 per barrel. Gold also regained some of its Friday losses, climbing 0.54% on the day to $2,897.65 an ounce.
Reserve Bank of Australia to Cut Rates for the First Time in Five Years
The Reserve Bank of Australia is expected to cut rates today for the first time since the COVID pandemic, and traders across Australian markets anticipate significant volatility following the update. The market is pricing in a 90% chance of a 25-basis-point cut, with most traders expecting movements to be driven by any fresh updates regarding forward guidance.
The board remained resolutely hawkish throughout 2024, even as most other major central banks turned dovish and began their rate-cutting cycles. The key risk for markets today lies in how much the bank’s rhetoric shifts in its statements and in Governor Michele Bullock’s press conference later in the session. Most traders expect her to maintain a slightly hawkish tilt in her outlook.
Event Calendar Picks Up Today
The macroeconomic calendar picks up significantly today, with major events scheduled across all three trading sessions.
The Asian session is heavily focused on the Australian market—a theme that will continue throughout the week—with the Reserve Bank set to deliver its first rate cut in years.
At the European open, attention will shift to the UK market, with the latest employment data set to be released (Claimant Count expected at +10k). Later in the session, Bank of England Governor Andrew Bailey is scheduled to speak. Additionally, the German ZEW Economic Sentiment Index is set for release today.
At the New York open, U.S. and Canadian traders will return after a long weekend, but initial focus will be on Canada, with key CPI data expected. The U.S. Empire State Manufacturing Index is also due at the same time, but for a change, expect the Canadian data to dominate market focus.
