Fed Holds Steady, Cites Rising Uncertainty

AUD

The AUD is down against majors as economic uncertainty puts pressure on the currency waiting to hear the outcome of trade talks between the US and China. Asian equities were steady on Wednesday with the Shenzhen +0.6%, the Hang Seng -0.1% and the Nikkei -0.1%. The ASX closed +0.3% led by +2.1% gains in energy stocks. No Data out Wednesday or today for both Australia and China. On Saturday, we'll see China's Consumer and Producer Price Indices.
 

USD

AUDUSD has fallen 1.3% from yesterday's 0.6514 highs, kicking off the day at 0.6431. The pair fell in the early hours with the USD strengthening off the back of a hawkish interest rate hold from the Federal Reserve. The Federal Funds Rate was held at 4.5%, as expected, with the central bank citing rising economic uncertainty. The USD strengthened after Fed Chair Powell indicated rising risks to both inflation and unemployment, posing a stagflation risk. Choppy conditions on Wall St. ultimately ended with the Dow Jones closing +.7%, the S&P 500 +.4%, and the Nasdaq +3%. Tonight, Unemployment Claims are expected at 231k for the week (prev. 241k).
 

EUR

AUDEUR opens down at 0.5690, with a continued rise in risk sentiment as uncertainty of where global trade talks will land. European markets closed in the red with the DAX closing at -0.6% and the CAC - 0.9%. German Factory Orders m/m came out at +3.6% showing an increase in production and manufacturing through rising purchase orders. European Retail Sales m/m were also released at -0.1% from previous 0.2%. A continued quiet week for the Euro with German Industrial Production m/m, German Trade Balance and Italian Industrial Production m/m to close out the week.
 

GBP

AUDGBP opens slightly down at 0.4839 with markets waiting to see the outcome of tonight's Bank of England Official Bank Rate decision. The FTSE closed down at -0.4. Yesterday we saw Construction PMI out at 46.6 from pervious 46.4. Tonight, we will see the BOE interest rate decision with a forecasted 9 votes by the Monetary Policy Committee Members to cut from 4.50% to 4.25%, with further commentary being released through the BOE Monetary Policy Report and Monetary Policy Summary and Press Conference. The BOE has been cutting rates once per quarter since August 2024. Markets currently expect a fast uptick in the pace of cuts, with 3 interest rate reductions expected over the next 4 meetings.
 

NZD

AUDNZD opened relatively flat at 1.0815, with the big day of data out yesterday seeing Employment Change q/q at 0.1% from previous -0.2% and Unemployment Rate unchanged at 5.1% (exp. 5.3%) Later in the day, RBNZ Gov Hawkesby spoke, stating the threat of a trade war has decreased but still uncertainty on how things will play out.