SuperCorp Financial Market Insights
US Market Shakeup💸
Trump vs Powell:
On July 8, Trump accused Powell of “misleading Congress” and demanded his resignation, renewing calls for rate cuts. The Fed’s June FOMC minutes show officials are divided. Most prefer to keep rates at 4.25%-4.5% to monitor economic data and tariff impacts on inflation. But some see July rate cut potential if the labor market weakens or inflation is lower than expected. The current rate is near neutral.
Inflation Expectations:
The New York Fed’s survey reveals one-year US inflation expectations dropped to 3% (a five-month low), while three-year and five-year expectations are at 3% and 2.6%. Despite higher gas, medical, and tuition expectations, food and housing expectations are stable. Employment prospects show lower unemployment risks yet rising concerns over re-employment difficulties.
Market Reactions:
US stocks rebounded as tech stocks soared. The Nasdaq rose nearly 1%, the S&P 500 and Dow gained 0.61% and 0.49%. Nvidia hit a record high, briefly reaching a $4 trillion market cap. Bitcoin broke through $112k and is up 19% YTD. The 10-year Treasury yield fell over 7 basis points to 4.33%. The US Dollar Index stood at 97.54, with offshore RMB stable at 7.18. Trump’s announced 50% tariff on South American goods from August caused the Brazilian real to plummet. Gold rose to $3,314/oz, oil prices faced pressure from increased crude inventories, and natural gas dropped nearly 3.8%.
RBA’s Surprise Hold and Its Impacts💸
RBA Decision:
On July 8, 2025, the RBA kept the cash rate at 3.85%, surprising the market. Among 32 economists surveyed by Bloomberg, only five predicted this. The AUD/USD quickly climbed over 0.7%, with AUD/NZD also strengthening. The RBA stressed the need for more data to confirm inflation’s return to the 2.5% target. It highlighted significant global uncertainties, especially US trade policies, which complicate economic decisions. Three of nine decision-makers opposed the stability stance and supported rate cuts.
Market Reactions:
The three-year Australian government bond yield rose five basis points to 3.42%. Money markets are re-evaluating previous bets on the cash rate being below 3% by 2026. AUD/USD surged to above 0.6545 but fell back. It remains in its downward channel since early July and may test the middle rail support at 0.6485. The AUD/NZD cross rate broke the key resistance of 1.0822 and is approaching the three-month high of 1.0887. If the RBNZ maintains a dovish stance or no longer signals easing, the NZD may gain support, pressuring the cross rate. The RBNZ has cut rates three times since the start of the year, totaling 100 basis points. It’s expected to keep the rate at 3.25% this time. The focus is on whether its statement hints at the end of the rate cut cycle. If the RBNZ shows intentions of policy tightening or pausing easing, it may trigger a technical rebound in the NZD, influencing the AUD/NZD spread. The RBA’s unexpected stability broke the market’s expectation of continuous rate cuts this year. The widening divergence between the two central banks may offer new forex trading opportunities.