A lot of the commentary heading into Tuesday’s RBA meeting has framed a rate hike as essentially a done deal, despite the way such a move would mark the shallowest easing cycle since at least the early 1990s. However, the risks of a surprise shouldn’t be overlooked, given the central bank’s recent track record, meaning AUD/USD is facing a very volatile day of its own.

President Trump’s comments that he plans to announce his nomination for the next Fed chair have helped to support the US dollar as it climbs ~0.4% against the yen, euro and other major peers. That may partly just be the potential for an end to uncertainty, but it’s also come as prediction markets show a surge in bets that former Fed Governor Kevin Warsh will be chosen.

Fed officials kept interest rates unchanged, as expected, and signalled a willingness to keep them on hold as they wait to see how the economy evolves. Chair Jerome Powell said that the labor market seems more stable and that most of the tariff impacts on inflation should work their way through prices by the middle of 2026.

Today's Fed 25 bps cut was less hawkish then most of the market expectations pre policy.

US economy looks upbeat before the crucial Dec FOMC meet.

With 5/12 FOMC members casting doubts about the need for further cuts, Dec FOMC might see a hawkish cut as base case.