RBA leaves the cash target rate unchanged at 1.5% as expected earlier this morning, its last rate move now dates back to August 2016. Markets are expecting 2 rate rises in 2018 on the back of improving data and as other major central banks gradually move away from more market stimultaion. However high levels of household debt have so far made it difficult for the Australian central bank to contemplate raising borrowing costs.
Asia was initially trading mixed ahead of the RBA decision but it seems that sentiment has now improved to better reflect the positive handover after the US close yesterday evening. At the time of writing amongst the major Asian inidices only the Australian ASX 200 was still in the red.
On the currency markets the US Dollar continues to strengthen after yesterday’s positive close. The US Dollar index is currently trading at 93.86. The Euro continues to suffer in the midst of reports of the Catalonia vote, the EURUSD marks fresh new session lows of 1.1701 on Tuesday.
The Yen is losing against most of the major counterparts this morning, last week Prime Minsiter Abe dissolved parliament and called a snap election on the 22nd October.
On today’s economic docket the situtaion looks relatively quieter, we have UK construction PMI and the EZ PPI index later today.
