Will RBA Surprise Traders and Raise Rates Again?

The Reserve Bank of Australia will announce its next rate decision at 04:30 GMT on Tuesday. Markets are pricing in a 45% probability for another rate increase, as inflation has been hotter than anticipated lately. If the RBA raises rates, the Australian dollar could benefit, although it’s questionable whether the currency can sustain a rally with the Chinese economy losing steam.  

Week Ahead – RBA and BoC to Hold Rates But Might be Tempted to Hike, OPEC+ Meets

Policy decisions from the RBA and the Bank of Canada will be taking centre stage next week amid an otherwise light agenda. In the United States, the ISM services PMI will be the only top-tier release and now that Congress has averted a default by suspending the debt ceiling, the dollar might spend the week drifting lower. Before all that however, OPEC and non-OPEC countries will meet on Sunday to discuss whether to make further cuts to oil output.

Week Ahead – Will OPEC+ Announce Another Cut? Deflationary Spiral in China?

Oil prices are rallying at the end of the week, perhaps a sign of nerves appearing before the OPEC+ meeting this weekend. While there seems to be a widely held view that the group won’t announce any further cuts, it’s worth noting that the same was true at the last meeting when it announced cuts of roughly another million barrels.

The Weekly Bottom Line: Hot GDP Report Adds to Case for a Rate Hike

Even with the significant tailwind of a new U.S. debt ceiling deal, Canadian equities were tracking lower (as of writing). Oil was an important part of this story. Indeed, the benchmark WTI oil price slid lower for much of the week (at one point pushing below $70/barrel), as Russia has made little progress on pledged output cuts and Chinese growth concerns continued to swirl. However, it did retrace a large portion of these losses at the end of the week on the strength of the debt ceiling pact.

Weekly Economic & Financial Commentary: The U.S. Avoids Default

This week, Congress and the president prevented what would have been the first default in U.S. history by agreeing to suspend the debt ceiling through the end of 2024. Despite a bewildering jobs gain that defied market expectations, data on balance continued to suggest that economic activity is slowing, albeit gradually.

RBA Board to Hold the Line at the June Meeting

The Reserve Bank Board meets next week on June 6. The meeting is live in that the case for a further rate increase is likely to be seriously discussed. However, we expect the Board to decide to hold the cash rate steady at 3.85% while continuing to emphasise its tightening bias.

Forex and Cryptocurrencies Forecast

The dollar has been rising since May 4. The DXY Index reached the 104.609 mark on the last day of spring, May 31. It hasn't soared this high since January 2023. As we have previously mentioned, two primary factors were propelling the American currency upwards.

OPEC-led Oil Rally Remains Short-Lived

The week kicked off with a jump in oil prices, after Saudi announced that it will cut its production by another 1mbpd starting from July, pulling its production to the lowest levels since years.

Dollar Profited from the Rate Support

The dollar profited from the rate support, but as for US yields, last week’s highs were untested. The trade-weighted dollar (DXY) closed at 104.02 from 103.56 and a May high at 104.70. EUR/USD closed at 1.0708 from 1.0762 and compared to the May low of 1.0635. US stock markets didn’t bother the higher US interest rates as the ongoing labour market strength once again underpins the resilience of the economy. Key indices closed 1% (Nasdaq) to 2% (Dow) higher.

FOMO Regime Change for US Stock Market

The laggards, Dow Jones Industrial Average & Russell 2000 have recorded stellar single-day outperformances on Friday, 2 June against the Nasdaq 100; at least a three-month high.