Forex Today: RBA Holds Rates, Warns On Recession - 07 May 2024

The Reserve Bank of Australia in its earlier policy meeting left its cash rate unchanged at 4.35% while warning that rate cuts were uncertain while a recession remains a risk.

  1. The Reserve Bank of Australia’s policy meeting took place a few hours ago, with the Bank leaving its Cash Rate at a 12-year high of 4.35%. The Bank warned that it may not be able to cut rates any further over the coming months, even though Australia remains at risk of falling into a recession. The Australian Dollar does not seem to have been specifically affected by this, as its performance remains mixed against major currencies.
  2. Stock markets look weakly bullish to bullish, with the S&P 500 Index advancing especially firmly over the past few days. However, the index is still well off its record highs made just a few weeks ago.
  3. The Japanese Yen is continuing to sell off this week after the big gains it made last week following two suspected interventions in its favour by the Bank of Japan. The Bank has again refused to comment on whether it intervened to try to prop up the Yen. Currency crosses often rebound the following week against an unusually large movement the previous week, and this seems to be acting here against the Yen. It may be wise to look for long trades in Yen crosses especially in AUD/JPY, CAD/JPY, and CHF/JPY.
  4. In the Forex market, since today’s Tokyo open, the strongest major currency has been the New Zealand Dollar, and the weakest major currency has been the Japanese Yen, putting the NZD/JPY currency cross in focus.
  5. Greyscale Bitcoin Trust, the world’s largest crypto investment vehicle, has seen a new inflow of funds for the first time since Bitcoin ETFs were approved, suggesting that there may be strong retail buying behind the recent recovery in the price of Bitcoin.

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