Global Markets Brace for Policy Shifts Amid Shutdowns and Rate Hikes

Australia’s Hawkish Turn

The Reserve Bank of Australia raised its benchmark interest rate by 25 basis points to 3.85%, signaling that inflationary pressures remain persistent. The move, widely anticipated by markets, suggests further tightening could follow later this year. Traders are already pricing in the possibility of another hike before year-end, underscoring the central bank’s determination to keep inflation under control.


U.S. Data Delayed by Government Shutdown

Across the United States, the partial government shutdown has disrupted the release of key economic indicators. The January jobs report, originally scheduled for Friday, has been postponed, leaving investors to rely on private-sector data such as the ADP Employment Change and ISM Services PMI. The uncertainty has kept the U.S. Dollar Index steady near 97.40, reflecting cautious sentiment as markets await clarity.

Currency Market Movements

Major currency pairs are showing mixed dynamics. The euro is trading near 1.1820 ahead of the European Central Bank’s policy decision, while the British pound has edged higher to 1.3690 as dollar weakness provides support. The Canadian dollar remains under pressure after its central bank left rates unchanged, with USD/CAD hovering near 1.3650. Meanwhile, the Australian dollar strengthened to 0.7000 following the RBA’s hike, and the yen slipped as USD/JPY climbed toward 155.80.



Gold Rebounds Toward $5,000

Gold prices recovered sharply, trading near $4,910 per ounce after erasing earlier losses. The precious metal continues to attract safe-haven demand amid political uncertainty and currency volatility. Investors view gold as both a hedge against inflation and a shield against depreciating currencies, reinforcing its role as a stabilizing asset in turbulent times.


What’s Next on the Economic Calendar

Markets are preparing for a busy week of data and decisions. Wednesday brings Eurozone inflation figures, U.S. employment data, and Australia’s trade balance. Thursday will see retail sales in Europe alongside policy announcements from the Bank of England and the ECB. Friday closes with Canada’s employment report and the U.S. consumer sentiment index, all of which could set the tone for global markets in February.