| Time | Country | Event | Period | Previous value | Forecast | Actual |
|---|
| 03:30 | Australia | Announcement of the RBA decision on the discount rate | | 4.35% | 4.35% | 4.35% |
| 07:00 | Germany | Factory Orders s.a. (MoM) | December | 0.0% | 0% | 8.9% |
During today's Asian trading, the US dollar declined slightly against major currencies, but remained near the 3-month high reached yesterday amid weakening expectations that the Fed will soon begin easing monetary policy.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.11% to 104.34. Yesterday, the index rose by 0.4%, reaching its highest level since November 14, helped by comments by Fed Chairman Jerome Powell and strong economic data. In an interview published on Sunday, Powell said the Fed would "wait a while" before cutting interest rates. Meanwhile, the Institute for Supply Management (ISM) reported that the growth of the US services sector accelerated in January amid an increase in new orders and a recovery in employment. The index of business activity in the non-manufacturing sector rose to 53.4 from 50.5 in December. Economists had forecast the index to rise to 52.0. The index of prices paid by enterprises for resources increased to 64.0, the highest value since February last year, from 56.7 in December. Although prices for services remain high, overall inflation is declining, with the personal consumption expenditures price index excluding food and energy rose by 2% year-on-year in the fourth quarter, in line with the Fed's 2% target. According to the CME FedWatch Tool, markets see a 16.5% probability of a 25 basis point rate cut at the Fed meeting in March and a 64.8% probability of a rate cut in May, with 115 basis points of cuts priced in for this year.
The Australian dollar rose 0.35% against the US dollar on the back of hawkish statements by the Reserve Bank of Australia. As expected, the Central Bank left interest rates at 4.35%, but warned that further interest rate increases may be required to contain inflation. Investors have steadily moved to push back bets for the first rate cut from the RBA to August, rather than June, with economists also expecting the RBA to stay steady on rates well into the second half of this year. Despite today's growth, economists warn that the bearish AUD picture remains unchanged, given the lags in RBA pricing compared to that of the Fed, as well as the broader downbeat China picture.