This Week in Markets: BoC Rate Cut, PMIs, Gold Rally Amid Rising World War Fears

In the Asian trading session today, the forex markets remained largely in consolidative state, with most major currency pairs moving within familiar ranges.

Forex markets remained largely in a consolidative state during the Asian trading session today, with most major currency pairs trading within familiar ranges.

The Japanese Yen showed slight firmness, trading in a tight range alongside the Dollar and Kiwi. Conversely, the British Pound Sterling softened, accompanied by the Loonie and Aussie.

The widely anticipated rate cut by PBoC did not elicit significant reactions in Asian markets, indicating that the move was already priced in by investors.

Market activity is expected to remain subdued today due to a near-empty economic calendar. Although several Fed officials are scheduled to speak, they are unlikely to provide substantial new insights that could influence market dynamics.

Fed remains on track for two additional 25 basis point rate cuts this year. Some policymakers might indicate the possibility of only one more cut, depending on upcoming economic data.

The main events for the week will take place midweek, with BoC’s widely anticipated rate cut on Wednesday, followed by the release of PMI data from Australia, Japan, the Eurozone, the UK, and the US on Thursday.

Technically, Bitcoin is starting to feel heavy around 70k handle. There is still no decisive momentum to push it through 73812 high. Indeed, break of 66627 support will suggest short term topping, and extend the consolidation pattern from 73812 with another falling leg.

In Asia, at the time of writing, Nikkei is up 0.11%. Hong Kong HSI is down -1.44%. China Shanghai SSE is up 0.36%. Singapore Strait Times is down -0.58%. Japan 10-year JGB yield is down -0.0087 at 0.962.

RBA’s Hauser signals no early rate cuts as inflation remains too high

RBA Deputy Governor Andrew Hauser highlighted today that inflation in Australia “is still too high for us to be considering cutting interest rates at this stage.”

Recent strong employment data led markets to push back the expected timing for the first rate cut from February to April. Hauser declined to comment on the market’s pricing but noted that “the response of rates to the data does seem to be quite encouraging.”

While acknowledging the importance of data, Hauser stressed that RBA is “data-dependent but not data-obsessed,” adding that broader economic conditions also factor into policy decisions.

“Activity has been weak, very weak, and we haven’t seen the inflation number for the third quarter yet,” he added.

This cautious approach by RBA contrasts with other central banks that have already begun easing, underscoring Australia's persistent inflationary pressures. The market will be closely watching the third-quarter inflation data to gauge the timing and magnitude of future policy changes.

Gold continues record rally amid rising world war fears

Gold prices edged higher in the Asian session today, extending their recent record-breaking run. While some market observers attribute the precious metal's rally to uncertainty surrounding the upcoming US presidential election—with no clear frontrunner between Democrat Kamala Harris and Republican Donald Trump—the persistent climb in U.S. stock markets to new record highs suggests that domestic political factors may not be the primary driver. Instead, escalating geopolitical risks appear to be fueling increased demand for Gold as a safe-haven asset.

In the Middle East, Israel has intensified its military operations in both Gaza and Lebanon following recent developments, including the death of a prominent Hamas leader. Reports indicate that Iran-backed Hezbollah has conducted drone attacks targeting areas near Israeli Prime Minister Benjamin Netanyahu’s residence. The prospects for a near-term ceasefire seem increasingly remote, raising concerns about broader regional instability.

Even more concerning, tensions are escalating in Eastern Europe. Thousands of North Korean troops are reportedly preparing to support Russia in its ongoing conflict in Ukraine, with some North Korean military officers already deployed. Ukrainian President Zelenskyy warned this could be the “first step to world war,” raising global alarm.

Technically, further rally is expected in Gold as long as 2685.34. Next target is 61.8% projection of 2471.76 to 2685.34 from 2604.53 at 2736.62.

But the a bigger test lies in 100% projection of 1984.05 to 2449.82 from 2239.45 at 2759.23. Strong resistance could be seen there to limit upside initially. However, decisive break above there would prompt upside acceleration. Next medium term target would then be 161.8% projection at 3047.08, which is slightly above 3000 psychological level.

PBoC slashes loan prime rates, HSI unmoved

People’s Bank of China lowered its one-year loan