The RBA keeps interest rates unchanged

The Reserve Bank of Australia has kept its key cash rate unchanged at 4.35% in the context of its Monetary Policy Committee, citing the slowing pace of economic growth and highlighting a data dependent approach with regard to the need for further tightening in order to bring back inflation to the 2% to 3% target range. The Aussie was trading at 0.6585 at the time of writing.

In Poland, a coalition of pro-European Union parties which won a majority of votes in recent elections is claiming that the Polish Central Bank governor Adam Glapinski is hampering the fight against inflation and breaking the constitution. Glapinski is being accused of acting in the interest of the outgoing ruling party PiS by cutting interest rates by a large amount right before the October election. In a letter, ECB President Christine Lagarde stated that the EU laws offer protection to the Polish central bank in case of unlawful prosecution. Today, the economic calendar features French industrial production, Services PMI for France, Italy, Spain, Germany and the Eurozone. The fibre is currently trading at 1.0836, being dragged down by a recovering greenback.

There is a growing market consensus that the Fed is done with its hiking cycle and will start cutting rates early next year. Fed President Powell has contributed in reinforcing those bets by recently saying that the Fed should maintain a balance between tight monetary policy and a soft economic landing. The market is pricing in a chance of over 60% of a rate cut by March 2024. Today the market will stay tuned to the publication of ISM Services PMI data. Other data due during the day include final services PMI, ISM Services PMI and JOLTS job openings. After sliding for almost 3 straight weeks, the USD is regaining some ground and is currently trading at 103.65 against 6 major peers. Meanwhile, bitcoin surged above the USD 42,000 level, boosted by optimism that the US regulators would approve an exchange-traded bitcoin fund.