Sentiment has continued to solidify behind an expectation that the US Federal Reserve would only cut rates by another 0.50%.

1. Sentiment continues to be hawkish on the US Dollar after the trigger event last Friday, when considerably stronger than expected US jobs and average earnings data was released. A solid majority of analysts now expects only a further 0.50% of cuts before the start of 2025 by 80% of market participants. Both the 2-Year and the 10-Year Treasury Yields are trading or have recently traded above 4%.
2. In the Forex market, the US Dollar is showing signs of topping out near the resistance level close by the current price. Since today’s Tokyo open, the strongest major currency has been the British Pound, while the weakest has been the Australian Dollar.
3. Gold and the S&P 500 Index remain relatively near their recent record highs, despite the US Dollar upturn.
4. Tomorrow will see a policy meeting at the Reserve Bank of New Zealand. The Bank widely expected to cut its Official Rate by 0.50% to 4.75%.
5. It is likely to be a quiet day in the markets, in the absence of any scheduled high-impact data releases.

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