MNI EUROPEAN OPEN: RBA Cuts 25bps, Limited Market Reaction

Aug-12 05:15By: Jonathan Cavenagh

Europe

EXECUTIVE SUMMARY

FED CHAIR SEARCH EXPANDS TO INCLUDE BOWMAN, JEFFERSON AND LOGAN - BBG
US, CHINA EXTEND TARIFF TRUCE BY 90 DAYS, STAVING OFF SURGE IN DUTIES - RTRS
TRUMP TO NOMINATE E.J. ANTONI AS BLS COMMISSIONER - MNI BRIEF
RBA LOWERS CASH RATE TO 3.6% - MNI BRIEF

Fig 1: RBA OIS Slightly Weaker Post RBA Meeting Outcome

Source: Bloomberg Finance L.P./MNI

UKRAINE (DW): “The prime ministers of the UK and Canada have called for Ukraine to be a part of any peace process negotiated between the US and Russia.”

GREECE (MNI): Greece’s funding plans for 2026 will probably include EUR 8-10 billion of new issuance, with the lower end of the range more likely, a source from the Greek treasury told MNI, adding that this year the country has already raised EUR7.5 billion of the target of EUR8 billion.

ECB (POLITICO): “The rise of dollar-linked stablecoins threatens Europe’s push to elevate the euro’s global standing and may ultimately weaken the European Central Bank’s control over the economy, three ECB officials told POLITICO.”

UKRAINE (BBC): “US President Donald Trump has said he will try to get some territory back for Ukraine during his meeting with Russian President Vladimir Putin on Friday. "Russia's occupied a big portion of Ukraine. They occupied prime territory. We're going to try to get some of that territory back for Ukraine," he told a news conference at the White House.”

FRANCE (BBC): “A French nuclear plant temporarily shut down on Monday due to a "massive and unpredictable presence of jellyfish" in its filters, its operator said. The swarm clogged up the cooling system and caused four units at the Gravelines nuclear power plant to automatically switch off, energy group EDF said. … its remaining two units already down for maintenance.”

FED (BBG): “The Federal Reserve’s two vice chairs, Michelle Bowman and Philip Jefferson, and Dallas Fed President Lorie Logan are under consideration to serve as chair of the central bank when the position opens next year, according to two administration officials.”

US/CHINA (RTRS): “The United States and China on Monday extended a tariff truce for another 90 days, staving off triple-digit duties on Chinese goods as U.S. retailers get ready to ramp up inventories ahead of the critical end-of-year holiday season.”

GOVERNMENT (MNI BRIEF): U.S. President Donald Trump said Monday that he will nominate the economist E. J. Antoni as commissioner of the Bureau of Labor Statistics, currently the chief economist at the conservative Heritage Foundation.

GOVERNMENT (RTRS): “U.S. President Donald Trump said on Monday he was deploying 800 National Guard troops to Washington and temporarily taking over the city's police department, an extraordinary assertion of presidential power in the nation's capital.”

OTHER

GOLD (BBG): “President Donald Trump said Monday imports of gold will not face US tariffs, weighing in after a federal ruling caused chaos and confusion in global bullion markets. “Gold will not be Tariffed!” Trump posted on social media.”

AUSTRALIA (MNI BRIEF): The Reserve Bank of Australia cut the cash rate by 25 basis points to 3.6% on Tuesday, with forecasts now showing core inflation reaching the 2.5% midpoint of its target range by end-2027.

BRAZIL (BBG): "The call between both leaders lasted nearly one hour, according to a statement from Brazil’s government."

CHINA

US/CHINA (BBG): “US President Donald Trump signaled on Monday that he’d be open to allowing Nvidia Corp. to sell a scaled-back version of its most advanced AI chip to China.”

US/CHINA (BBG): "China has urged local companies to avoid using Nvidia Corp.’s H20 processors, particularly for government-related purposes, complicating the chipmaker’s attempts to recoup billions in lost China revenue as well as the Trump administration’s unprecedented push to turn those sales into a US government windfall."

BONDS (SECURITIES TIMES): "Overseas central bank–type institutions will no longer need to provide a compliance commitment letter when opening accounts to invest in China’s interbank bond market starting Monday, Securities Times reported."

MNI: PBOC Net Drains CNY46.1 Bln via OMO Tuesday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY114.6 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY46.1 billion after offsetting maturities of CNY160.7 billion today, according to Wind Information.

The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4111% at 09:30 am local time from the close of 1.4404% on Monday.
The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 47 on Monday, compared with the close of 46 on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Higher At 7.1418 Tues; -0.19% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1418 on Tuesday, compared with 7.1405 set on Monday. The fixing was estimated at 7.1905 by Bloomberg survey today.

MARKET DATA

UK BARCLAYS JULY CONSUMER SPENDING +1.4% Y/Y; JUNE -0.1% Y/Y

JAPAN JULY M2 MONEY STOCK +1.0% Y/Y; JUNE +0.9%
JAPAN JULY M3 MONEY STOCK +0.6% Y/Y; JUNE +0.4%

AUSTRALIA JULY NAB BUSINESS CONDITIONS 5; JUNE 7
AUSTRALIA JULY NAB BUSINESS CONFIDENCE 7; JUNE 5

MARKETS

US TSYS: Asia Wrap - Market Eyes CPI, Very Quiet Asian Session

The TYU5 range has been 111-23 to 111-26 during the Asia-Pacific session. It last changed hands at 111-25, down 0-03+ from the previous close. All eyes on the US CPI tonight to confirm if there any signs of inflation taking hold.

The US 2-year yield is trading around 3.768%.
The US 10-year yield is trading around 4.283%.
The 10-year yield had a powerful move lower in reaction to the NFP data, breaking below its 4.30% pivot within the wider range 4.10% - 4.65%. This now turns momentum lower in yields and you could expect buyers of treasuries on bounces back towards 4.30/35% now looking to initially test the 4.10% area.
MNI US CPI Preview: High Early Bar To September Fed Hold. The CPI report for July is released on Tuesday Aug 12, at 0830ET. Consensus sees core CPI inflation at a seasonally adjusted 0.3% M/M in June and unrounded analyst estimates broadly echo this with a median 0.32% M/M. It would mark a further acceleration from 0.23% M/M in June and 0.13% M/M in May for its fastest pace since January, with the latest firming seen coming from core goods inflation doubling to 0.4% M/M.
Truflation on X: “July BLS CPI FORECAST: 2.8% YoY. Tariffs are biting, the labor market is cooling, and consumers are wobbling, pointing to slower growth. Could this signal upside risks to inflation? July highlights, goods prices accelerating as tariffs pass through; services cooling (but still supported by wage growth). Biggest upward contributors: Education +0.7% MoM (+2.9% YoY) · Utilities +0.6% (+4.6%) · Health +0.5% (+3.0%) · Alcohol & Tobacco +0.6% (+3.1%). Biggest downward contributors: Food −0.6% MoM (+2.7% YoY) · Housing −0.5% (+0.8% YoY)
Data/Events: NFIB Small Business Optimism, CPI, Federal Budget Balance

Fig 1: 10-Year US Yield 2H Chart

Source: MNI - Market News/Bloomberg Finance L.P

JGBS: Slightly Cheaper Ahead Of US CPI, PPI & 5Y Supply Tomorrow

JGB futures are weaker but off lows, -9 compared to the settlement levels.

Cash US tsys are little changed in today's Asia-Pac session ahead of today's US CPI data.
(MNI) The CPI report for July is released on Tuesday Aug 12, at 0830ET. Consensus sees core CPI inflation at a seasonally adjusted 0.3% M/M in June and unrounded analyst estimates broadly echo this with a median 0.32% M/M. It would mark a further acceleration from 0.23% M/M in June and 0.13% M/M in May for its fastest pace since January, with the latest firming seen coming from core goods inflation doubling to 0.4% M/M.
(Bloomberg) -- Bond investors betting on a Federal Reserve interest rate cut next month face a potential roadblock: inflation. July's consumer price index, due on Tuesday, will give traders clues on how President Donald Trump's tariffs are affecting costs. Economists surveyed by Bloomberg expect the annual core inflation rate to rise to 3%, the highest since February.
Cash JGBs are showing a modest sell-off across benchmarks, led by the 30-year. The benchmark 10-year yield is 0.9bp higher at 1.499% versus the cycle high of 1.616%.
Swap rates are flat to 1bp higher, with a steepening bias.
Tomorrow, the local calendar will see PPI and Machine Orders data alongside 5-year supply.

AUSSIE BONDS: RBA Cuts As Expected, Limited Reaction

ACGBs (YM -0.5 & XM -1.0) are moderately richer after the RBA cut the cash rate by 25bps to 3.60%.

The Board noted that inflation continues to moderate toward the 2–3% range. Trimmed mean inflation fell to 2.7% and headline inflation to 2.1% in the June quarter. Domestic demand is gradually recovering, household incomes have risen, and labour market conditions, though easing, remain tight.
With 75bps of cuts this year, the Board remains cautious but ready to respond to shifts in global or domestic conditions, maintaining its focus on price stability and full employment.
Cash ACGBs are 1-2bps richer after the RBA decision, with the AU-US 10-year yield differential at -2bps.
Swap rates are 2-4bps lower after the decision, with the 3s10s curve steeper.
The bills strip has richened since the decision but sits flat on the day.
RBA-dated OIS pricing is flat to 3bps softer across meetings after the decision, mid-2026 leading. A 25bp rate cut in August was given a 97% probability today. A cumulative 36bps of easing priced by year-end.
Tomorrow, the local calendar will see the Q2 Wage Price Index.
The AOFM plans to sell A$1200mn of the 4.25% 21 December 2035 bond tomorrow and A$1000mn of the 2.75% 2 1 November 2029 bond on Friday.

BONDS: NZGBS: Subdued Session Ahead Of US CPI Data

NZGBs closed little changed after trading in narrow ranges on a data-light day.

Cash US tsys are little changed in today's Asia-Pac session ahead of today's US CPI data.
(MNI) The CPI report for July is released on Tuesday Aug 12, at 0830ET. Consensus sees core CPI inflation at a seasonally adjusted 0.3% M/M in June and unrounded analyst estimates broadly echo this with a median 0.32% M/M. It would mark a further acceleration from 0.23% M/M in June and 0.13% M/M in May for its fastest pace since January, with the latest firming seen coming from core goods inflation doubling to 0.4% M/M.
Swap rates are unchanged.
With the next RBNZ meeting approaching (August 20), this week contains a number of high frequency releases that the MPC monitors and should give a sense for how the economy began Q3.
July card spending is out tomorrow and while it is off its lows, growth has remained soft. There could be some payback in the month following the 0.5% m/m rise in June.
RBNZ dated OIS pricing is unchanged across meetings. 23bps of easing is priced for August, with a cumulative 40bps by November 2025.
On Thursday, the NZ Treasury plans to sell NZ$200mn of the 3.00% Apr-29 bond and NZ$250mn of the 2.75% Apr-37 bond.

AUD: Asia Wrap - AUD Dips In Reaction To Cut, Focus Turns To Press Conference

The AUD/USD has had a range of 0.6500 - 0.6526 in the Asia- Pac session, it is currently trading around 0.6510, -0.05%. Risk has traded a little higher in our session, E-minis +15%, NQU5 +0.15%. The AUD/USD has moved a couple of spreads lower in reaction to the RBA cutting rates by 25bps. Focus will now turn to the press conference, then the US CPI tonight.

“ RBA Says: Will Be Attentive to Data, Evolving Assessment of Risks, Sees Risk Households, Firms Delay Spending, Policy Well Placed to Respond Decisively to Global Factors, Forecasts Assume Trade Concerns Weigh on Aust. Inflation, Trade Policy Expected to Have Adverse Effect on Global Eco.” - BBG
"Australian Consumer Confidence Dn 1.3 Pts Last Week - ANZ Roy Morgan" - DJ
AUSTRALIA DATA: Business Outlook May Have Turned. NAB’s measure of business confidence can be volatile but it has been trending higher since April and printed at 7 in July up from 5 in June and -2 in March signalling an improvement in how firms see the outlook. Business conditions moderated to 5, but are still above every month this year except June, which was revised down 2 points to 7. The activity components moderated in July but generally remained at levels above May.
Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6565(AUD908m). Upcoming Close Strikes : 0.6575(AUD646m Aug 13), 0.6600(AUD1.25b Aug 14) - BBG
CFTC Data shows Asset managers added to their shorts -60729(Last -49183), the Leveraged community added very slightly to their own shorts -13997(Last -13823).
AUD/JPY - Asia-Pac range 96.37 - 96.83, Asia is trading around 96.60. The pair has bounced nicely and is testing its first resistance around the 96.50 area. There should be sellers around here initially, a sustained break below 94.50/95.00 is needed to signal a deeper move lower or a break above 97.50 would reinstate the momentum higher.

Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

FOREX: Asia FX Wrap - USD Treads Water Ahead Of CPI

The BBDXY has had a range of 1206.70 - 1207.69 in the Asia-Pac session, it is currently trading around 1207, -0.10%. The USD bounced in the N/Y Session as some shorts pared back their exposure as we look toward the US CPI tonight. A sustained break back below 1198 points to a retest of the lows, and a bounce back towards 1220/1230 should probably be faded initially. Where the CPI comes in tonight will determine which level gets tested.

EUR/USD - Asian range 1.1610 - 1.1625, Asia is currently trading 1.1620. The pair has bounced nicely off the important 1.1300/1.1400 area. The market has stalled at its first attempt to challenge the resistance around the 1.1700 area. Having moved away from 1.1700 the US CPI tonight will determine if we have another go at it.
GBP/USD - Asian range 1.3426 - 1.3440, Asia is currently dealing around 1.3430. The pair bounced nicely off the 1.3100/1.3200 support area. Sellers saw the move higher stall just above 1.3450 and the US CPI will have a say in if that is now the top in the short-term.
USD/CNH - Asian range 7.1895 - 7.1965, the USD/CNY fix printed 7.1418, Asia is currently dealing around 7.1930. Sellers should be around on bounces while price holds below the 7.2200/2500 area and the PBOC manages the fix lower. Above 7.2500 and we could see a test of the USD Shorts.
Cross asset : SPX +0.07%, Gold $3352, US 10-Year 4.283%, BBDXY 1207, Crude Oil $64.18
Data/Events : EZ Zew Survey, Germany Zew Survey/Current Account Balance

Fig 1: GBP/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

JPY: Asia Wrap - USD/JPY Probes Above 148 As Shorts Pared Back Into US CPI

The Asia-Pac USD/JPY range has been 148.05 - 148.45, Asia is currently trading around 148.45, +0.19%. USD/JPY is probing above 148.00 as the market pares back on some USD’s shorts going into the US CPI tonight. Price is holding above the support area between 146.00/147.00, a move sub 145.00 is needed to turn momentum lower once more, until then the 145.00-151-00 range should dominate. US CPI tonight will determine which end of the range is tested.

MNI US CPI Preview: High Early Bar To September Fed Hold. The CPI report for July is released on Tuesday Aug 12, at 0830ET. Consensus sees core CPI inflation at a seasonally adjusted 0.3% M/M in June and unrounded analyst estimates broadly echo this with a median 0.32% M/M. It would mark a further acceleration from 0.23% M/M in June and 0.13% M/M in May for its fastest pace since January, with the latest firming seen coming from core goods inflation doubling to 0.4% M/M.
(Bloomberg) -- Bond investors betting on a Federal Reserve interest rate cut next month face a potential roadblock: inflation. July’s consumer price index, due on Tuesday, will give traders clues on how President Donald Trump’s tariffs are affecting costs. Economists surveyed by Bloomberg expect the annual core inflation rate to rise to 3%, the highest since February.
Options : Close significant option expiries for NY cut, based on DTCC data: 147.30($878m), 146.00($597m).Upcoming Close Strikes : 147.00($1.01b Aug 13), 150.25($1.47b Aug 13) - BBG.
CFTC data shows asset managers reduced their JPY longs +60532( Last +75119), leveraged funds slightly reduced their newly built short JPY position -29308(Last -31280).

Fig 1 : USD/JPY Spot H2 Chart

Source: MNI - Market News/Bloomberg Finance L.P

NZD: Asia Wrap - NZD/USD Consolidating On A 0.59 Handle, Awaits US CPI

The NZD/USD had a range of 0.5933 - 0.5946 in the Asia-Pac session, going into the London open trading around 0.5935, -0.05%. Risk has traded a little higher this morning, E-minis +0.10%, NQU5 +0.10%. NZD/USD bounced nicely off its 0.5850 support last week but depending on your view I would suspect sellers could return on any bounce back toward 0.6000/0.6050. For the moment firmly back in the 0.5850-0.6100 range looking for a catalyst to break and give clearer direction. The US CPI tonight might hopefully clear the picture a little.

(Bloomberg) -- Australia’s dollar is expected to lag behind its New Zealand counterpart as their economies and central bank policies diverge, according to a Barclays note. Dovish risks are higher for the RBA as Australia’s economy slows, a currency strategist at Barclays writes in a note. On the other hand New Zealand’s growth is gaining momentum and inflation has rebounded. Aussie is also vulnerable to slower global growth and weakness in the Chinese economy.
(Bloomberg) - Shipments from China, the US’s second-largest source of imports, started drying up noticeably in the lead-up to the Aug. 11 deadline to avoid re-imposing massive reciprocal tariffs. The drop-off may add to investors’ nervousness over whether equities can extend this year’s surge in the face of President Trump’s trade war.
Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5825(NZD300m Aug 14). - BBG
CFTC Data shows Asset Managers have cut their longs completely and started to rebuild a short in the NZD -1811(Last +3903), the Leveraged community added to their shorts slightly -6778(Last -6250).
AUD/NZD range for the session has been 1.0964 - 1.0983, currently trading 1.0980. The Cross continues to trade sideways after stalling towards the 1.1000 area once more. The range looks to be 1.0850-1.1000 for now.

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

ASIA STOCKS: Japan markets Outperform, Aided By Earnings

In the equity space, the major indices are mostly in the green at this stage. Japan benchmarks are the standout, while gains are more modest elsewhere. US Equity futures are a touch higher, after modest cash losses in Monday US trade. The focus is on the US CPI print later. A decent upside surprise is likely needed to derail a Fed cut in September.

For Japan markets, the Topix is up a further +1.7%, while the NKY 225 is around +2.7%, trading at fresh record highs. Cited catalysts have been tariff related relief (that Japan avoided a worse case scenario), while better earnings in the tech space are another positive. The Topix information and communication sub index is up around 2.7% at this stage. Markets were also out yesterday, so some catch up may be in play.
In China and Hong Kong markets are higher, although more so for China. The CSI 300 is up around 0.6%, while the HSI is just in positive territory. There has been some drag from the HSI tech sub index.
The Taiex is up a touch, while the South Korean Kospi is close to flat. The Kospi was up in early trade, but the South Korean Presidential Office denied earlier onshore media reports around a potentially favorably stock capital gains tax ruling.
In South East Asia, Indonesian stocks are up strongly, last +1.3%. Thailand and Singapore are down modestly.
In Australia, the ASX 200 is close to flat as markets await the RBA decision in a few minutes. The central bank is widely expected to cut rates by 25 bps.

OIL: Crude Range Trading Ahead Of Key Events Later Tuesday

Oil prices are slightly higher today ahead of US July CPI data, industry-reported US inventories, and EIA and OPEC monthly reports out later. Moves so far this week signal some stabilisation as the market watches the outcomes of the week’s events, which also include Friday’s Trump-Putin meeting on Ukraine.

WTI is up 0.3% to $64.17/bbl after rising to $64.22 and then falling to $63.90 – a narrow range. Brent is also 0.3% higher at $66.83/bbl and has traded between $66.92 and $66.60.
Trump said that Friday is more of a “feel-out meeting” and that he will report back to Ukrainian/European leaders afterwards. So it remains some time before the easing of sanctions on Russia can be considered.
The 90-day extension of the current US-China trade stance to November 9 has calmed markets concerned that an escalation in trade tensions would weigh on growth and especially energy demand.
US July CPI data are forecast to show both core and headline ticking up 0.1pp to 3.0% and 2.8% respectively (see MNI US CPI Preview) and will be monitored for signs of any tariff impact. A higher-than-expected print could pressure oil as demand concerns would increase. The market has around an 85% chance of a rate cut for the Fed’s September meeting.
July US NFIB small business optimism, real earnings and budget data are also released, as well as UK labour data and euro area/German August ZEW sentiment. The Fed’s Barkin and Schmid speak on the economy.

GOLD: Market Now Watching US CPI After Trump Clarified Gold’s Tariff Status

After falling 1.6% on Monday, gold prices are 0.3% higher at $3350.7/oz during Tuesday’s APAC session following US President Trump’s post that “Gold will not be Tariffed!”, although this is yet to be formally announced. The market had been concerned following a customs ruling that certain gold imports would face duties, which would have impacted the smooth functioning of the market. Attention now turns to July US CPI data out later today and will be monitored for signs of higher tariffs being passed on.

Gold reached a high of $3357.48 early in the session, below initial resistance at $3409.2, 8 August high.
Silver is also higher up 0.7% to $37.88, close to the intraday high but continuing to trade below initial resistance at $39.655.
Equities are generally stronger with the S&P e-mini up 0.1%, Nikkei +2.5% but the Hang Seng is flat. Oil prices are up with WTI +0.3% to $64.14/bbl. Copper is 0.6% higher.
US July CPI data are forecast to show both core and headline ticking up 0.1pp to 3.0% and 2.8% respectively (see MNI US CPI Preview). A higher-than-expected print would pressure gold prices. The market has around an 85% chance of a rate cut for the Fed’s September meeting, which would support bullion.
July US NFIB small business optimism, real earnings and budget data are also released, as well as UK labour data and euro area/German August ZEW sentiment. The Fed’s Barkin and Schmid speak on the economy.

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Country	Event
12/08/2025	0600/0700	***	GB	Labour Market Survey
12/08/2025	0600/0700	***	GB	Labour Market Survey
12/08/2025	0600/0700	***	GB	Labour Market Survey
12/08/2025	0600/0700	***	GB	Labour Market Survey
12/08/2025	0900/1100	***	DE	ZEW Current Expectations Index
12/08/2025	0900/1000	**	GB	Gilt Outright Auction Result
12/08/2025	1000/0600	**	US	NFIB Small Business Optimism Index
12/08/2025	1100/1200		GB	BOE APF Quarterly Report
12/08/2025	-	***	CN	Money Supply
12/08/2025	-	***	CN	New Loans
12/08/2025	-	***	CN	Social Financing
12/08/2025	1230/0830	*	CA	Building Permits
12/08/2025	1230/0830	***	US	CPI
12/08/2025	1230/0830	***	US	CPI
12/08/2025	1230/0830	***	US	CPI
12/08/2025	1255/0855	**	US	Redbook Retail Sales Index
12/08/2025	1400/1000		US	Richmond Fed's Tom Barkin
12/08/2025	1430/1030		US	Kansas City Fed's Jeff Schmid
12/08/2025	1600/1200	***	US	USDA Crop Estimates - WASDE
12/08/2025	1800/1400	**	US	Treasury Budget
13/08/2025	0130/1130	***	AU	Quarterly wage price index
13/08/2025	0600/0800	***	DE	HICP (f)
13/08/2025	0700/0900	***	ES	HICP (f)
13/08/2025	1100/0700	**	US	MBA Weekly Applications Index