Forex Today: RBA Holds Rates, Trump's Tariffs Shake Markets

Summary

The Reserve Bank of Australia (RBA) surprised markets by holding its Cash Rate at 3.85%, defying expectations of a 0.25% cut. Meanwhile, President Trump unveiled a sweeping round of tariffs targeting Asia and Africa, triggering volatility across currencies and commodities. The Australian Dollar surged, while the US Dollar softened amid trade uncertainty.

🇦🇺 RBA Policy Hold: Hawkish Pause Signals Bigger Cut Ahead

The RBA’s decision to maintain its Cash Rate at 3.85% caught traders off guard. Markets had priced in a 25bps cut, but the central bank cited inflation concerns and opted to wait for more data. Governor Michele Bullock hinted at a possible larger cut in August, fueling speculation of a 50bps move. The AUD/USD pair rallied sharply, breaking above 0.6530 as traders recalibrated expectations.

🇺🇸 Trump’s Tariff Wave: Global Trade Tensions Escalate

President Trump announced steep tariffs on countries including Malaysia (25%), Laos (40%), and Indonesia (32%). The move sparked fears of retaliatory measures and disrupted risk sentiment. While Japan and South Korea were also targeted, their stock markets closed higher, suggesting resilience. The Euro gained on rumors of a behind-the-scenes 10% tariff deal with the US, lifting EUR/USD toward 1.1750

Currency Movers: AUD Strongest, JPY Weakest

Since Tokyo’s open, the Australian Dollar has led gains among major currencies, while the Japanese Yen lagged. AUD/JPY surged past 146.00, driven by the RBA’s hawkish tone and Japan’s trade vulnerability. EUR/USD continued its bullish trend, supported by improving sentiment and tariff negotiations. The US Dollar Index (DXY) dipped below 97.50, reflecting a shift away from safe-haven demand.

Commodities: Silver Near Highs, Gold Stabilizes

Silver prices climbed toward $36.00/oz, nearing long-term highs amid renewed industrial demand and inflation hedging. Gold rebounded from early-week losses, stabilizing around $3,330/oz. Traders are watching for further moves as tariff tensions and central bank decisions shape the precious metals landscape.

Market Outlook: Calm Before RBNZ Decision

With no major economic releases scheduled today, markets are expected to remain relatively quiet until the Reserve Bank of New Zealand’s policy meeting tomorrow. Traders are positioning cautiously, balancing central bank signals with geopolitical developments. Volatility may spike if RBNZ surprises with a rate move or commentary on regional trade risks.