Oil prices continue to tumble, falling down to US$75/barrel, surging market confidence and seemingly killing the inflationary threat. The RBA decided to leave rates unchanged, citing the inflationary threat as lower, due to tensions easing in the Middle East. The real story is that the RBA has raised rates at their last three meetings, challenging borrowers and threatening recession in the economy. The Bank of Japan acted decisively, raising rates to 1%, the highest in more than 30 years. Japan does want to combat the spike in inflation, due to energy prices, but perhaps enjoying the inflationary cycle following decades of deflation. The EUR was in recovery mode, holding above 1.1600, while the GBP consolidated above 1.3400.The surge in market confidence allowed commodity currencies to stabilise, with the NZD approaching 0.5840, while the AUD trades around 0.7075. Market attention will now turn to the Fed’s rate decision scheduled for tomorrow.
