RBA Remains Cautious as Global Risks Loom, Despite Resilient Domestic Growth

Economic

Summary:

Governor Michele Bullock signaled that the Reserve Bank of Australia remains vigilant to potential shifts in the economic outlook, despite domestic data aligning with expectations...

Australia’s Central Bank Stays Guarded Amid External Uncertainty and Strong Domestic Trends

In her latest remarks before lawmakers on Monday, Reserve Bank of Australia (RBA) Governor Michele Bullock emphasized that while Australia’s economic data remains broadly aligned with forecasts if not slightly stronger the global economic backdrop remains too uncertain to ignore. As a result, the RBA is treading carefully with further policy decisions.

According to Bullock, since the central bank’s last policy meeting in August, domestic indicators have largely held steady or surprised to the upside. The RBA continues to forecast that inflation is on track to return to the 2–3% target midpoint, and unemployment remains near full employment, meeting the bank’s dual mandate objectives.

This stability comes on the back of three rate cuts already enacted in February, May, and August, which brought the official cash rate to 3.6%. The gradual pace of easing reflects the RBA’s commitment to quarterly data assessment, particularly on inflation trends.

Data-Driven Caution Ahead of September Meeting

Bullock made clear that the Board will closely evaluate the latest data in its upcoming meeting next week. While consumer spending lifted GDP growth to its fastest pace in nearly two years in Q2, the surprise jump in July inflation is giving pause to further aggressive cuts.

Markets have responded accordingly. While a September 30 rate cut is now viewed as unlikely, the probability of a November cut has been reduced to 75%, down from full certainty just weeks ago. Interest rate swaps suggest only 48 basis points of further easing by mid-2026, indicating less than two additional cuts are priced in.

External Risks Could Shift the Narrative

Despite this domestic resilience, Bullock warned of mounting global uncertainties including geopolitical tensions, shifting global demand, and volatile commodity prices which could still derail the economic outlook. These external risks remain a key factor in the RBA’s cautious posture.

The RBA’s current strategy hinges on flexibility and patience. While Australia’s internal economy is showing encouraging signs of balance and recovery, the broader environment continues to demand careful observation. Any future policy easing will depend not just on domestic conditions, but also on how international developments unfold in the months ahead.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

Economic

Fed’s Rate Cut on Shaky Ground Ahead of PCE Data Release

The Federal Reserve’s decision to resume rate cuts last week will be swiftly tested on Friday, when the August Personal Consumption Expenditures (PCE) price index its preferred inflation gauge is released. With the forecast set at 2.8% year-on-year, anything higher could trigger renewed concerns that the Fed’s quarter-point cut was premature and inflation may not be fully under control.

Bond markets have already shown signs of skepticism. Yields on both 10-year and 30-year U.S. Treasurys edged higher following the rate cut a counterintuitive reaction if the market were fully aligned with the Fed’s dovish move. Typically, lower interest rates drive yields down, but concerns over government debt levels and long-term fiscal policy may be distorting the picture. The rise in yields may also reflect bond investors’ reluctance to embrace a rate-cutting cycle amid lingering inflationary risks.

In contrast, U.S. equities rallied strongly. The S&P 500 and Dow Jones Industrial Average ended the week at record highs, and the Nasdaq Composite rose 2.2%, showing risk-on sentiment among equity traders who welcomed easier monetary policy.

Upcoming PCE Report Is Critical

The core PCE price index has been the Fed’s go-to inflation metric for setting policy direction, as it offers a broader view of consumer prices excluding volatile items like food and energy. A print at or below the 2.8% forecast would support the Fed’s case that inflation is on a sustainable path downward, justifying the rate cut. But a surprise to the upside could trigger doubts over whether inflation has been tamed and force markets to reconsider expectations of further easing.

With bond markets flashing warning signs and equity markets optimistic, Friday’s data could either reconcile this divergence or widen the gap further. If inflation is shown to be stickier than expected, the Fed could face criticism for easing too soon, and the recent stock market gains might be seen as overextended.

Global Context Adds Complexity

The U.S. isn’t making decisions in a vacuum. Recent geopolitical and economic developments, such as President Trump’s high-stakes talks with Chinese President Xi Jinping over TikTok, Trump’s proposed $100,000 annual H-1B visa fee, and South Korea’s financial concerns over a $350 billion investment deal with the U.S., add volatility to the global environment. All these factors could ultimately influence investor expectations about inflation, capital flows, and Fed policy credibility.

Markets often judge monetary policy with the benefit of hindsight. For the Fed, that moment of truth arrives Friday. If the PCE lands at 2.8% or below, Chair Powell’s quarter-point cut will appear measured and timely. Anything higher, however, could spark questions about the Fed’s foresight and whether it traded long-term stability for short-term market relief.

Source: CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Cautious Confidence: RBA Balances Resilient Domestic Economy with Global Uncertainty

In a testimony before lawmakers on Monday, Reserve Bank of Australia (RBA) Governor Michele Bullock affirmed the central bank’s cautious stance amid a complex mix of steady domestic data and a turbulent global backdrop. While recent economic indicators have largely met or slightly exceeded the central bank’s expectations, Bullock emphasized the need for continued vigilance over possible shifts in the economic outlook.

Since the RBA’s August policy meeting, Australian economic data have been “broadly in line… or slightly stronger,” Bullock noted, citing consumer spending improvements and unexpected inflation upticks in July. These figures suggest momentum in the domestic economy, particularly as annual GDP growth for Q2 marked the fastest pace in nearly two years.

At the same time, Bullock warned that global conditions remain “uncertain and unpredictable,” implying that any deterioration abroad could pose downside risks to Australia's recovery.

RBA’s Dual Mandate Nearing Achievement

Bullock reiterated that Australia is approaching both components of the RBA’s dual mandate: price stability and full employment. Inflation is on track to return to the midpoint of the central bank’s 2-3% target, while the labor market continues to operate close to full capacity.

This supports the RBA’s gradual approach to easing, which has included three rate cuts this year in February, May, and August bringing the cash rate down to 3.6%. Unlike more aggressive central banks, the RBA has emphasized data-dependence, choosing to wait for quarterly inflation releases before acting.

Market Reaction: Odds of Further Cuts Reassessed

Markets have responded by reassessing the path of future rate cuts. Following the recent upside inflation surprise, expectations for a cut on September 30 have diminished, and the probability of a November cut has dropped from 100% to 75%. Swaps now imply a total of 48 basis points of easing by mid-2026, equating to fewer than two additional cuts.

The RBA’s stance remains one of measured optimism confident in domestic fundamentals but cautious of external shocks. With inflation not fully subdued and global risks rising, the central bank appears content to stay patient and assess incoming data, rather than commit to an aggressive easing path. Investors and analysts alike will closely watch next week's meeting for further clarity on how the RBA plans to balance short-term resilience with longer-term uncertainty.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Trump’s $100K Visa Hike Jolts Tech, While Fed Uncertainty Keeps Asian Markets Cautious

Asian equity markets saw a hesitant start to the week on Monday, with gains tempered by fresh political risks and investor uncertainty surrounding U.S. monetary policy. The MSCI Asia-Pacific ex-Japan index ticked up just 0.09%, while Japan’s Nikkei rose 1%, partially recovering from Friday’s losses.

Investor anxiety was stirred by U.S. President Donald Trump’s announcement that his administration would raise fees for new H-1B worker visas to $100,000 per year. The move, framed as part of his broader immigration crackdown, delivers a major blow to tech companies heavily reliant on skilled labor from India and China. The decision is particularly damaging for India’s $283 billion IT industry, which earns over half its revenue from the U.S.

Trump’s policy shift follows his earlier decision to double tariffs on Indian imports to as much as 50%, exacerbating already strained ties between Washington and New Delhi. These protectionist measures could erode corporate margins and force tech firms to consider offshoring despite potential U.S. penalties.

“It’s a risk to operating costs and margins… and companies may face punitive measures if they resort to offshoring,” said Kyle Rodda, analyst at Capital.com.

Fed in Focus as Markets Eye Inflation Clues

The broader market tone remained cautious, shaped by lingering questions over the Federal Reserve’s rate trajectory. Although the Fed cut rates last week, it hinted at a gradual easing path ahead. Roughly 44 basis points of cuts are still priced in by year-end, and investors are awaiting core PCE inflation data due Friday, forecasted to rise 0.2% monthly, keeping the annual rate at 2.9%.

A series of Fed speeches this week including from Chair Jerome Powell and Governor Stephen Miran could sway rate expectations and influence U.S. Treasury yields, in turn impacting global currency and equity markets.

Dollar Steady, Yen Softens on BOJ Tensions

The U.S. dollar index held near 97.716, staying on a modest upward path. Chris Weston of Pepperstone noted that while the greenback’s near-term direction remains debated, rising Treasury yields and supply could support continued USD strength.

The Japanese yen softened to 148.20 per dollar following Friday’s Bank of Japan decision, in which two board members unexpectedly voted for a rate hike to 0.75%, signalling a growing internal push toward normalization. OCBC’s Vasu Menon described the move as “a signal the BOJ is gradually turning hawkish,” potentially raising JGB yields and weighing on Japanese equities.

Commodities: Oil and Gold Inch Up

In commodities, Brent crude edged 0.3% higher to $66.89, while WTI crude rose 0.35% to $62.90, buoyed by geopolitical tensions in Europe and the Middle East. Gold climbed 0.24% to $3,692.79, hovering near last week’s record high as investors maintained a risk-hedging posture amid global uncertainties.

The intersection of U.S. immigration policy, trade friction, and uncertain monetary signals continues to test global investor confidence. Asian markets, while technically higher, reflect deep underlying caution as tech supply chains, labor mobility, and cross-border investments face fresh headwinds in an already fragile economic recovery.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Samantha Luan

Commodity

Stocks

Forex

Economic

Markets moved sideways early in the week as traders waited for key central bank decisions. U.S. retail sales were stronger than expected, while U.K. inflation stayed high at 3.8%. The Bank of England met first, kept rates unchanged as expected, and said any future cuts would depend on clear signs that inflation is falling steadily.The U.S. Federal Reserve then cut interest rates by 0.25% and suggested there could be two more cuts before the end of 2025. The Fed noted slower job growth and a weaker labor market but also said inflation is still somewhat high. The U.S. dollar dipped at first but soon recovered, finishing the week strong. U.S. stock markets hit new record highs, helped by the rate cut and strong gains in technology shares.

The Bank of Japan also kept rates unchanged but surprised markets by saying it will slowly start selling some of its large holdings of exchange-traded funds (ETFs) and real estate trusts (J-REITs). The Nikkei index fell briefly but rebounded after the BoJ promised the sales would be very gradual. Two board members voted for a 0.25% rate hike, and Governor Kazuo Ueda said gradual tightening is possible if the economy and inflation stay on track, leading markets to expect a possible rate increase later this year.

Markets This Week

U.S. Stocks

U.S. equities saw profit-taking early last week ahead of the FOMC announcement, but the selling was brief as buyers stepped in near the 10-day moving average. The Dow then climbed to fresh record highs after the Fed’s 0.25% rate cut and guidance for two more cuts in 2026. With the FOMC maintaining a bullish tone, the uptrend has resumed, making buying on dips toward the 10-day moving average the preferred strategy. Key resistance is now at 46,500, 47,000, and 48,000, while support lies at 45,700, 45,000, 44,000, and 43,000.

Japanese Stocks

The Nikkei 225 surged after the FOMC announcement, extending its recent strong gains. However, the Bank of Japan’s surprise plan to begin selling its ETF and J-REIT holdings caused a sharp drop on Friday before the market recovered into the close. With the BoJ moving closer to a possible rate hike and starting asset sales, further gains may be harder to achieve, so a sideways-to-lower move is expected this week. Resistance is at 46,000円 and 47,000円, while support is at 45,500円, 45,000円, and 44,000円.

USD/JPY

USD/JPY again tested the lower end of its recent range last week after the U.S. rate cut and dovish comments from Fed Chair Powell. Surprisingly, strong support held near 146, and the pair finished the week firmly as the market had been positioned for deeper losses. The rebound is notable and could attract more buying this week, but range trading between 146 and 149 remains the preferred strategy. Key resistance is at 148, 149, and 150, with support at 146 and 145.

Gold

Gold had a volatile week, posting new record highs again after the U.S. interest rate cut. The uptrend remains very strong, with prices holding above the 10-day moving average as buyers stay aggressive. In the short term, following the uptrend can be profitable, but waiting for a break below the 10-day moving average to sell may offer the best near-term trading opportunity given how far the market has already climbed. Resistance is at $3,700 and $3,800, while support stands at $3,600, $3,500, and $3,450.

Crude Oil

WTI crude stayed under pressure last week, failing to hold above the key $65 level after an early rise. Concerns about a slowing U.S. economy and the potential for weaker demand kept sellers in control, limiting any upward momentum. For short- and medium-term traders, selling into strength or waiting for a decisive break below $60 remains the preferred strategy as the market struggles to find support. Key resistance is at $65, $70, and $75, while support is at $60 and $55.

Bitcoin

Bitcoin had a quiet week, consolidating earlier gains and briefly rising on the U.S. interest rate cut before sellers pushed prices back below the 10-day moving average, signaling an end to September’s uptrend. The market is now expected to test lower and provide range-trading opportunities between $112,000 and $120,000 in the near term. Key levels remain unchanged, with resistance at $120,000, $125,000, and $150,000, and support at $112,000, $105,000, and $100,000.

This Week’s Focus

● Monday: U.K. BoE Gov Bailey Speaks

● Tuesday: E.U. HCOB Eurozone Manufacturing PMI, U.K. S&P Global Manufacturing PMI, U.S. Current Account and S&P Global Manufacturing PMI

● Wednesday: Japan au Jibun Bank Services PMI and BoJ Core, U.S. Building Permits and New Home Sales

● Thursday: Japan Monetary Policy Meeting Minutes, U.S.Initial Jobless Claims, Durable Goods Orders, GDP and Existing Home Sales

● Friday: Japan Tokyo Core CPI, U.S. Core PCE Price Index and Michigan Consumer Sentiment

This week the market will continue to forecast the next moves in U.S. and Japanese interest rates as traders digest last week’s central bank meetings. A busy economic calendar includes manufacturing data from Europe, the U.K., and the U.S., with Thursday’s U.S. durable goods orders and GDP, and Friday’s U.S. Core PCE Price Index and Michigan Consumer Sentiment all likely to create volatility and trading opportunities. FX markets remain range-bound but look ready for a breakout, while traders will watch closely to see if equities and gold can extend their strong uptrends.

Source: ACTIONFOREX

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Forex

Dollar Stable as Traders Brace for Fed Commentary, Global Currencies Under Pressure

The U.S. dollar maintained a firm footing in early Asian trading on Monday, as investors turned their attention to a busy week of Federal Reserve speeches that may provide insights into the central bank’s policy trajectory. The calm in currency markets follows a volatile week marked by rate decisions from the Fed, the Bank of England (BoE), and the Bank of Japan (BOJ).

Following the Fed’s unexpected resumption of its easing cycle last week, the dollar initially dipped but quickly found support as traders reassessed the long-term path of interest rates. The U.S. Dollar Index rebounded modestly to 97.75, reflecting renewed confidence in the greenback's near-term stability. With approximately ten Fed speakers scheduled this week including Chair Jerome Powell traders are hoping to gain clarity on the Fed's balance between cutting rates and maintaining inflation discipline.

Market interest is especially high in the upcoming remarks from Fed Governor Stephen Miran, who dissented in favor of a more aggressive 50 basis-point cut during the September meeting. Miran's explanation, expected later Monday, could signal deeper divisions within the Fed or potential political pressures on its independence.

BOJ and BoE Divergence Adds to Currency Complexity

The Japanese yen, which rallied last week on a hawkish shift in BOJ rhetoric, gave back some of its gains on Monday, slipping 0.16% to 148.22 per dollar. Speculation about a near-term rate hike continues to simmer, but profit-taking and caution have re-entered the market.

Meanwhile, sterling fell to a two-week low of $1.3458, weighed down by worsening UK fiscal conditions and growing investor skepticism about the BoE’s ability to manage both inflation and economic stagnation. Public borrowing surged in the UK, adding pressure on policymakers already seen as unlikely to resume tightening. Rabobank now projects the next BoE rate cut to be delayed until 2026, though this is already priced in.

According to Jane Foley of Rabobank, “GBP investors remain focused on fiscal concerns, which may keep the pound under pressure into the autumn.”

Euro and Aussie Drift Lower in Cautious Trading

Elsewhere, the euro edged down 0.07% to $1.1738, continuing a slow grind lower, while the Australian dollar eased 0.02% to $0.6589, showing muted reaction to broader risk sentiment as global demand concerns remain elevated.

In Asia, the People’s Bank of China (PBOC) kept its benchmark lending rates unchanged for the fourth straight month, in line with market expectations. The offshore yuan reacted modestly, rising 0.06% to 7.1151 per dollar. While Beijing’s wait-and-see stance maintains financial stability, it also signals limited near-term stimulus despite sluggish post-COVID growth recovery.

With the Fed’s policy pivot fresh in memory, this week’s deluge of speeches will serve as a crucial guide for traders recalibrating expectations for U.S. monetary policy. While the dollar remains buoyant for now, the path forward hinges on how clearly Fed officials articulate their rate strategy, inflation outlook, and the balance between political influence and central bank independence.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Commodity

Geopolitical Tensions Push Oil Prices Higher, but Supply Pressures Linger

Oil markets opened the week with modest gains, as escalating geopolitical tensions in both Europe and the Middle East injected fresh risk premiums into Brent and WTI prices. Brent crude climbed by 0.42% to $66.96, while WTI rose 0.32% to $62.88 during early trading on Monday. Yet, any rally remains capped by the weight of oversupply and trade-related concerns about global fuel demand.

Russia’s recent military maneuvers including missile strikes near Poland’s border and a violation of NATO airspace over Estonia have revived fears about European energy security. The NATO-member Poland responded swiftly by deploying aircraft to secure its airspace, and a UN Security Council meeting has been called in response to Estonia’s complaint.

This regional instability, coupled with Ukraine’s stepped-up drone attacks on Russian refineries and terminals, underscores the fragile nature of energy infrastructure in Eastern Europe a dynamic that continues to influence market psychology.

Middle East Risk Returns as Diplomatic Shifts Stir Tensions

Meanwhile, in the Middle East, new political rifts have emerged. The recognition of Palestinian statehood by four Western countries has triggered a sharp backlash from Israel, adding a layer of geopolitical uncertainty in the oil-rich region. These developments come as energy traders remain wary of any disruptions in key supply arteries across the Middle East.

Despite these risks, the oil market’s upside is limited by strong supply fundamentals. Iraq, a major OPEC+ member, has increased exports, reporting an August average of 3.38 million barrels per day (bpd). The state oil marketer SOMO expects this to rise further in September to 3.4–3.45 million bpd, following the easing of voluntary output cuts.

Additionally, rising output from the United States, OPEC+, and even Russia as oil-producing nations respond to falling revenues is adding to the perception of a supply-heavy market.

Muted Demand Outlook Amid Tariff Fears and Mixed Sentiment

Concerns about global demand persist, especially amid fears of new trade tariffs that could dampen global growth and reduce fuel consumption. While some analysts had hoped the U.S. Federal Reserve’s anticipated rate cuts would stimulate demand, last week’s 1%+ drop in both Brent and WTI suggests that these expectations are being overshadowed by broader bearish factors.

As Michael McCarthy of Moomoo Australia & New Zealand noted, the market is navigating conflicting forces: “Rising geopolitical risk is offering support, but there are strong assumptions around increased supply and weaker demand that are holding prices back.”

The near-term trajectory of oil prices will depend on whether geopolitical shocks escalate further or if the market continues to be dominated by supply-side pressures. For now, traders appear cautiously bullish but the rally remains fragile, easily susceptible to shifts in either direction.