Analysts from Commonwealth Bank of Australia anticipate that rate cuts from the Reserve Bank of Australia will not occur until later in the year. They project three 25 basis point cuts to take place in May, August, and November 2025.

Commonwealth Bank of Australia analysts expect the Reserve Bank of Australia to hold off on lowering interest rates until much later. They foresee three reductions, each by a quarter of a percentage point, set for May, August, and November of next year.

Impact On Borrowing Costs

This suggests that borrowing costs in Australia will remain where they are for some time, providing fewer immediate changes for those tracking rate movements. With the RBA keeping rates steady in the near term, present conditions will persist, forcing markets to adjust expectations accordingly.

For traders, this means upcoming decisions should factor in how long tighter monetary policy could last. If there are no shifts in guidance from officials, expectations of lower rates would likely be pushed further down the line. Any fresh data on inflation or employment will be central, especially if those figures move in unexpected directions.

We have seen how quickly market sentiment can shift when policymakers introduce new signals. Any deviation from current forecasts may bring unexpected moves, especially if economic indicators suggest inflationary pressures are fading faster than the central bank currently anticipates. However, if figures remain elevated, officials may delay any reductions even further.

Outlook For Traders

For now, nothing indicates immediate change. Traders gauging potential shifts should consider what stalled rate adjustments mean for different markets, as well as how they could influence longer-term expectations.

Create your live VT Markets account and start trading now.

The US Dollar Index (DXY) has seen a decline for two consecutive sessions, currently trading around 106.30 during European hours. Demand for the US Dollar remains supported by heightened risk aversion due to increasing global tariff tensions.

On Monday, President Trump signed an order to raise tariffs on Chinese imports to 20%, while similar actions for Mexico and Canada are still under consideration. The US will implement reciprocal tariffs on nations that impose duties on its goods starting April 2.

Canada plans to introduce 25% retaliatory tariffs on US imports if the US tariffs proceed. China’s Commerce Ministry has also indicated it will take necessary countermeasures to protect its interests.

Impact Of Trade Disputes

Despite ongoing trade issues, the US Dollar experiences downward pressure as optimism over a potential peace deal in Ukraine reduces demand for safe-haven assets. Support from European leaders for security guarantees for Ukraine has enhanced global market risk sentiment.

Recent US economic data displayed mixed results. The ISM Manufacturing PMI fell to 50.3, below the forecast of 50.5 and down from January’s 50.9, while S&P Global’s final Manufacturing PMI for February improved to 52.7, surpassing expectations.

Attention is now focused on key US labour data, with the ADP employment report due on Wednesday and the Nonfarm Payrolls report on Friday, both of which could influence the Federal Reserve’s interest rate outlook.

Markets are currently navigating through a number of challenges, each influencing the value of the US dollar in different ways. On the one hand, trade disputes continue to escalate, particularly between the United States and China, with new tariff measures adding layers of uncertainty. Although these tensions typically drive demand for safer assets, the US dollar has lost some strength over the past two days. This suggests that other factors are playing a stronger role in determining its movement.

It is worth noting that the decision to raise tariffs on Chinese imports, now set at 20%, adds further pressure to global trade relations. There is also the possibility that similar measures will be applied to goods from Mexico and Canada, though no final decisions have been announced. Retaliation from both these countries, as well as from China, is expected. Canada has already laid out plans to impose a 25% duty on certain US imports, and Beijing has indicated it will act to protect its interests. This tit-for-tat strategy historically leads to increased volatility in currency markets.

At the same time, geopolitical events in Europe have exerted downward pressure on the dollar. The possibility of a peace deal in Ukraine has bolstered confidence across global markets, reducing the appeal of safe-haven assets. European leaders backing security guarantees for Ukraine have contributed to an improved sentiment, which in turn has weighed on the US currency.

Recent economic data from the US has been mixed. Manufacturing activity, tracked by ISM, showed a slight decline, coming in at 50.3, which was below both expectations and the previous month’s reading. However, S&P Global’s measure of factory activity exceeded forecasts, climbing to 52.7. With figures sending contrasting signals, traders are now looking ahead to upcoming labour market reports.

Market Reactions And Future Outlook

In the next few days, employment data will draw close scrutiny. The ADP report, due Wednesday, provides a measure of private-sector job growth, while the all-important Nonfarm Payrolls report on Friday will carry weight in influencing expectations for Federal Reserve policy. Any signs of continued strength in hiring could reinforce arguments for keeping interest rates higher for longer. Conversely, if figures show a slowdown, the dollar may see further weakness as traders reprice expectations for future monetary policy adjustments.

For those in the derivative space, these events create opportunities for both short-term positioning and longer-term moves. With multiple forces driving the US dollar in opposing directions, caution remains warranted when planning entries and exits. Understanding which elements hold the greatest sway in the moments leading up to key announcements can make all the difference.

Create your live VT Markets account and start trading now.

The Reserve Bank of Australia’s Deputy Governor, Hauser, is scheduled to speak at the Australian Financial Review’s Business Summit in Sydney at 8.45am local time, which corresponds to 2145 GMT or 1645 US Eastern time.

The minutes from the Bank’s February meeting indicate the first rate cut since late 2020, reflecting concerns about downside risks to the economy. The CEO of the Commonwealth Bank of Australia anticipates that further rate cuts may not occur until later in the year, unless global economic conditions worsen significantly.

Market Expectations For The Speech

Hauser’s remarks will likely provide more insight into how the Reserve Bank of Australia currently views inflation trends and financial stability. Market participants will be paying close attention to whether the Deputy Governor reinforces the cautious stance reflected in the central bank’s recent meeting minutes or signals any shift in outlook. Given the timing of the speech, early reactions may be observed in local markets before influencing broader sentiment across currency and bond markets in later sessions.

The February minutes suggest policymakers opted for a measured approach, acknowledging economic pressures that could justify easing while stopping short of committing to a rapid pace of rate reductions. Concerns about global conditions remain, but domestic factors appear to have held greater weight in decision-making. The caution expressed by the Commonwealth Bank of Australia’s leadership aligns with this, as they anticipate any further reductions in borrowing costs to be contingent upon external weakness feeding through to the national economy.

With expectations for the next phase of policy still in flux, traders will be weighing Hauser’s comments for clarity on timing and potential catalysts for further adjustments. Any deviation from the central bank’s prior messaging could drive immediate shifts in pricing for rate-sensitive instruments. If reaffirmed caution prevails, adjustments to expectations may be more gradual, with markets focusing on incoming data to reassess probabilities.

Impact On Markets And Positioning

As the speech unfolds, movements in Australian yields and the dollar should be observed closely. Should Hauser adopt a more resolute tone in favour of caution, the immediate response may be muted, reinforcing existing positioning. However, if a more open-ended view on policy is hinted at, volatility could increase, particularly if investors perceive room for adjustments earlier than previously considered.

Near-term positioning will be shaped by how much weight the Reserve Bank places on external versus domestic risks. If international conditions deteriorate at a faster pace, the probability of earlier easing rises, and today’s speech may offer hints on how the central bank intends to balance these considerations. The coming weeks will likely see traders adjusting positions to account for any recalibration of expectations in response to both this communication and incoming economic data.

Create your live VT Markets account and start trading now.

The US Dollar remains weak, affecting its value, while expectations of prolonged higher interest rates from the Federal Reserve may restrict gold’s gains.

Economic Impact Of Interest Rates

Recent tariffs imposed on Mexico and Canada and the potential for reciprocated tariffs from China contribute to market apprehension.

Economic indicators remain a central focus. The latest ISM Manufacturing PMI slipped to 50.3 in February, barely holding in expansion territory, suggesting the economy is not firing on all cylinders.

Key Technical Levels To Watch

Traders will be paying close attention to upcoming key releases, especially the Nonfarm Payrolls report. Any surprises there could alter the outlook for both the dollar and gold, shifting short-term expectations.

Create your live VT Markets account and start trading now.

The European Central Bank (ECB) is projected to reduce interest rates by 25 basis points on March 6, bringing the deposit rate down to 2.5%. This adjustment has been anticipated by the markets.

Attention will focus on President Christine Lagarde’s views on monetary policy, particularly whether she maintains her description of it as “restrictive.” Analysts expect her to keep this view, but any change could lead to a market response indicating a slower easing cycle.

The ECB will release its statement at 1315 GMT, followed by Lagarde’s press conference at 1345 GMT.

Market Reactions To Rate Decision

Market participants have already priced in the expected rate cut, meaning the impact of the decision itself is likely to be limited. However, the tone Lagarde adopts during her press conference could shape trading activity far more than the policy change. Should she emphasise concerns over inflation persistence, markets might start to question whether further easing will arrive as quickly as some estimates suggest. That, in turn, could lead to an adjustment in rate expectations and a reaction in bond markets.

On the other hand, if Lagarde signals confidence that inflation is trending towards target, borrowing costs may shift lower in anticipation of additional rate reductions. Such guidance would affect not only short-term interest rate markets but also the euro, with traders re-evaluating currency positioning accordingly. Volatility could emerge depending on the strength of her commitment to a particular direction.

Beyond the immediate reaction, updated ECB economic projections will provide another piece of information to monitor. Inflation and growth forecasts could reinforce or challenge the assumptions traders have made about the pace of rate adjustments this year. Any revisions—particularly to next year’s inflation outlook—would help determine whether policymakers see room for a faster easing cycle or if they continue signalling caution.

Implications For Global Markets

How financial markets navigate this event will depend on how expectations adjust in response to the statement and press conference. While a 25-basis-point cut has long been factored in, any suggestion that policy easing might pause after a few moves would require an adjustment in pricing. The degree of confidence in forward guidance will dictate how asset prices shift in the hours following Lagarde’s remarks.

Short-term yields will be among the most sensitive indicators during the event. If policymakers lean towards a more patient approach, yields could rebound somewhat, reflecting doubts over additional near-term cuts. However, should the opposite occur—with stronger signals of forthcoming reductions—then downward pressure on yields may intensify. Market participants will need to stay alert to shifts in tone throughout the press conference, as subtle changes in emphasis could be just as relevant as outright declarations.

Looking ahead, attention will not rest solely on the ECB. External influences such as Federal Reserve policy expectations and incoming economic data from the euro area will continue shaping rate forecasts. If inflation in Europe surprises in either direction in the weeks that follow, markets will likely reassess their timelines for further adjustments. Additionally, divergence between major central banks could introduce further complexity, as investors weigh relative policy paths and how they impact capital flows.

With these factors in mind, trading conditions may remain highly reactive in the short term. The level of certainty provided by policymakers this week will determine how much room there is for markets to shift in the sessions that follow.

Create your live VT Markets account and start trading now.

The US dollar (USD) is trading lower due to a sharp decline in UST yields and weaker US economic data, with the DXY at 106.27. Key statistics from ISM manufacturing, new orders, and employment have shown disappointing results.

Starting today, new tariffs introduced by the US on Canada, Mexico, and China may escalate trade tensions. China is reportedly preparing countermeasures, including tariffs on US agricultural products.

### Expected Retaliatory Measures
Retaliatory tariffs are expected from Canada and Mexico. This situation could increase the demand for safe haven currencies like USTs and JPY while high-beta currencies are under pressure.

Current technical indicators suggest a potential consolidation, with support levels at 106.35 and 106.10, and resistance between 107.30 and 108.50.

The weakening of the US dollar comes as a result of Treasury yields falling alongside economic data that has fallen short of expectations. The DXY index, positioned at 106.27, reflects these pressures. Manufacturing activity, new orders, and employment figures have all missed forecasts, pointing to possible slowing economic momentum.

From today, newly imposed tariffs on imports from Canada, Mexico, and China could introduce fresh friction into trade relations. Reports indicate that Beijing is preparing to strike back, potentially introducing duties on agricultural imports from the United States. Ottawa and Mexico City are also likely to respond, which could lead to a broader shift in market sentiment.

### Market Reactions And Technical Outlook
In times of market uncertainty, investors tend to pivot towards safer assets, and we may see increased interest in government bonds and the Japanese yen as a result. On the other hand, risk-sensitive currencies are likely to struggle. This shift comes as traders weigh the broader economic impact of renewed trade disputes.

Looking at technicals, there is evidence that price action may stabilise in the near term, with notable support around 106.35 and 106.10. Resistance sits in a wider band between 107.30 and 108.50, meaning any break in either direction could set momentum for the next move. For traders navigating derivatives markets, price behaviour around these levels may provide valuable insights into sentiment.

Create your live VT Markets account and start trading now.

Measured Approach To Rate Cuts

Comyn’s remarks suggest that expectations of rapid rate reductions should be tempered. Inflation remains a concern, and policymakers will require ongoing evidence of a slowdown before making adjustments. With borrowing costs still elevated, businesses and households may not see immediate relief. This stance means financial markets should prepare for a more measured approach rather than swift monetary loosening.

We recognise that interest rate decisions influence asset prices and market sentiment. A slower approach to rate cuts could maintain pressure on funding costs, affecting liquidity and positioning. Investors who had anticipated earlier reductions may need to reassess their strategies in light of these comments.

Comyn’s reference to economic data emphasises that future policy moves will not be predetermined. Inflation trends, employment figures, and consumer spending will all come under scrutiny. Any unexpected shifts in these areas could alter the central bank’s timeline. For those watching price movements closely, each data release in the coming months will provide additional insight into how monetary policy might adjust.

Impact On Market Confidence

A drawn-out easing cycle may also affect confidence across various asset classes. If inflation proves persistent, policymakers will have little justification for early intervention. Markets hoping for relief in the near term might encounter volatility as expectations adjust.

These factors highlight the importance of monitoring indicators that influence monetary decisions. Traders should stay alert to inflation reports, labour statistics, and economic growth figures. Each release will shape forecasts and determine whether sentiment shifts once again.

Create your live VT Markets account and start trading now.

The Japanese yen is benefitting from a shift towards conservative foreign exchange positioning. This trend is supported by the potential for global interest rates to align more closely with Japan’s low rates due to concerns about a global trade war.

A move below the 148.50/65 mark for USD/JPY may prompt a sell-off in equities or a significant miss in US job reports. Such conditions could lead to increased attention towards a lower Federal Reserve policy rate. The EUR/JPY, AUD/JPY, and CAD/JPY pairs are projected to decline as market activity is reassessed.

Reassessment Of Risk Management

The current strength of Japan’s currency reflects not only hesitancy in broader markets but also a reassessment of how risk should be managed. Investors are positioning themselves with more caution, given the uncertainty surrounding global trade relationships and potential shifts in monetary policy across key economies. If financial conditions tighten or expectations for interest rates in major economies decline, this cautious stance may continue to shape trading decisions.

A breach of the 148.50/65 level in USD/JPY could suggest either an external shock in equity markets or weaker-than-expected employment figures in the United States. Either scenario would support lower expectations for the Federal Reserve’s policy rate. These developments could push traders to unwind positions in carry trades, which may result in declines against Japan’s currency across several crosses. This is especially relevant for the euro, Australian dollar, and Canadian dollar, as these pairs exhibit sensitivity to risk sentiment adjustments.

Recent patterns in these crosses indicate that traders are already considering the possibility of less accommodating central bank policies outside Japan. With uncertainty remaining around economic performance in key regions, the reassessment of risk exposure is likely to drive further downward pressure. Should data releases over the coming weeks confirm weaker growth or softer inflation dynamics, repositioning may intensify.

Impact On Market Participants

We have seen that market participants are willing to react swiftly to changing policy expectations. The implications for derivatives traders lie in their ability to interpret rate differentials effectively and balance their exposure appropriately. If volatility persists, the pricing of options and futures may reflect higher demand for protection against adverse moves. Given this backdrop, staying alert to upcoming economic releases will be essential, particularly those that could alter expectations for policy direction in the United States and Europe.

Movements in other asset classes will also provide useful context. If equity markets begin to price in lower growth expectations, this could reinforce cautious positioning in foreign exchange. Additionally, energy prices and commodity demand trends play a role in how certain currencies react, particularly those tied to resource exports. Those monitoring short-term interest rate differentials should be mindful of how swiftly sentiment can shift in response to new data.

Create your live VT Markets account and start trading now.

Canada plans to impose 25% retaliatory tariffs on U.S. imports starting Tuesday if U.S. tariffs proceed. This will affect U.S. goods valued at approximately C$30 billion.

The new tariffs will be enacted if U.S. tariffs on Canada and Mexico take effect at 12.01 am on Tuesday, March 4, 2025, US Eastern time. Canada is also discussing various non-tariff measures with provinces and territories should the U.S. tariffs continue.

Canada’s Retaliatory Measures

This means that if the United States follows through with its planned tariffs on Canadian and Mexican goods, Canada will respond with its own measures within hours. Roughly C$30 billion worth of American products would be subject to new import duties, raising costs for businesses and consumers alike. The timing is firm. If U.S. officials do not reverse course before the deadline, Canadian levies will begin without delay.

The Canadian government is not limiting its response to higher import taxes. Officials are working with provincial and territorial leaders to assess further measures beyond standard trade restrictions. This suggests that policymakers are preparing broad strategies to shift trade patterns or apply pressure in other economic areas. There will be few surprises if additional steps follow after the initial tariff response.

For traders, the direct consequences are not vague. Clear deadlines mean that price adjustments may emerge swiftly, affecting contracts tied to Canadian and American markets. Exchange rate movements could also reflect shifting trade expectations. Volatility may rise in both commodity and equity derivatives, particularly in sectors that rely on cross-border trade flows.

Economic And Market Impact

Retaliation of this scale is not a routine event. When two of the world’s largest economies enter a tariff dispute, the effects spread across markets. If discussions between officials do not lead to adjustments before tariffs take effect, supply chains will begin absorbing new costs. Prices in certain industries may adjust sooner than others, depending on how companies react.

Those monitoring futures and options should account for these changes. Some industries will see immediate pricing shifts, while others might take longer to reflect new costs. Currency markets are also in play, especially if confidence in broader trade stability begins to shift.

Create your live VT Markets account and start trading now.

Mexico City, Mexico, February 2025 – Markets today are volatile in a more complex and protectionist trading environment, which alters the mood of investors. In this context, effective strategies and advanced decision-making tools are essential to operate successfully and adapt to the new market dynamics.

In its participation in Money Expo Mexico 2025, VT Markets reaffirmed its commitment to traders, sharing practical approaches to optimise their performance in these markets. The multi-award winning broker consolidated its commitment to education and technology as fundamental pillars to help both experienced traders and those new to trading.

Following this vision, VT Markets was present at Money Expo Mexico 2025, the most important financial event in Latin America, which brought together more than 5,000 attendees, 150 financial brokers and 50 exhibitors on 26 and 27 February at the Centro Citibanamex. Strategies for more accurate trading As a multi-asset broker, VT Markets provided a space where attendees could interact with its team and learn about strategies designed to improve their trading in a competitive environment. One of the highlights of the event was the conference given by Eduardo Ramos, senior analyst at VT Markets, who shared strategies for trading the financial markets with a focus on gold trading (XAUUSD). During his presentation, Ramos addressed:

– Fundamental principles of risk management in gold trading.

– How to effectively capitalise on gold price movements.

– Tools and strategies to improve accuracy in decision making.

“The key to success in financial markets is not predicting the future, but knowing how to react with precision and control when volatility strikes. Smart investing is not a matter of luck, but of preparation, discipline and the ability to remain calm under pressure. That is the difference between those who survive and those who thrive”, Ramos stressed during his participation.

Enriching experiences for traders

Attendees had the opportunity to explore advanced trading tools, receive personalised advice and learn about financial solutions designed for both novice and experienced traders. In addition, VT Markets organised exclusive prize draws, adding to the attractiveness of the experience.

On Day 2 of the Money Expo Mexico, VT Markets was proudly recognized as the “Top Broker for Partnership Programme”. This accolade marks a successful conclusion to the company’s participation, reinforcing its leadership and strong foothold in the LATAM trading and brokerage sector.

Money Expo: A benchmark for the financial sector

Beyond being an exhibition space, Money Expo Mexico 2025 established itself as a key event for the exchange of knowledge and strategies in the financial industry. Companies such as VT Markets stood out for their focus on innovation and commitment to the region’s community of traders and investors. With its participation in the event, VT Markets reinforces its mission to support traders with cutting-edge resources, consolidating itself as a strategic ally for those seeking to remain competitive in the constantly evolving financial markets.

For event photos, please visit: https://bit.ly/VTMEM

About VT Markets

VT Markets is a regulated multi-asset broker with a presence in over 160 countries as of today. It has earned numerous international accolades including Best Online Trading and Fastest Growing Broker. In line with its mission to make trading accessible to all, VT Markets offers comprehensive access to over 1,000 financial instruments and clients benefit from a seamless trading experience via its award-winning mobile application. 

For more information, please visit the official VT Markets website or email us at [email protected]. Alternatively, follow VT Markets on Facebook, Instagram, or LinkedIn. 

For media enquiries and sponsorship opportunities, please email [email protected], or contact: 

Dandelyn Koh 

Global Brand & PR Lead 

[email protected]  

Brenda Wong 

Assistant Manager, Global PR & Communications 

[email protected]