Central Bank

After Trump comeback, normality to return to markets with US CPI.GDP data from UK and Japan to also be important.But volatility to likely persist as markets assess impact of Trump 2.0.

The US Fed has cut its policy rate by 25bp. They acknowledge that policy remains restrictive and that further cuts are likely but that the pace of those cuts may slow. They were reluctant to discuss the ‘Trump effect’, but here’s the risk: slightly firmer growth with more inflationary pressures. And that might lead to a less aggressive rate-cut narrative.

The Australian dollar (AUD) saw moderate gains, with the AUD/USD rate climbing above 0.6600 in recent overnight trading. This movement reflects cautious optimism as markets await the U.S. election outcome and closely monitor signals from the Reserve Bank of Australia (RBA) regarding future interest rate adjustments.

Why Donald Trump’s victory in the US presidential election means fewer Fed rate cuts and more from the ECB than we’d previously expected.

In summary, no one knows quite which foot to dance on. All eyes are on Powell and Bailey to help chart a roadmap.

The Federal Reserve is expected to cut the Fed funds rate by 25 basis points at the November 7 meeting. This aligns with market expectations and follows a weaker-than-expected nonfarm payroll report.

The RBA Board left the cash rate unchanged at 4.35%, as expected. Disinflation on track but Board still vigilant to upside inflation risks and is not ruling anything in or out.

The RBA is holding firm on rates, but with inflation concerns still high and the US election looming, what’s the next move for the Aussie dollar? As bonds take a beating and AUD/USD edges higher, here’s how both domestic policy and global events could shape the outlook.

Aussie may not be affected from this meeting.