Rate Cuts Down Under and Trump’s Next Moves: Global Markets Brace for a Turbulent Week
Global financial markets are entering a pivotal stretch as two Antipodean rate cuts loom large, the Federal Reserve releases its latest meeting minutes, and U.S. President Donald Trump continues to make headlines with new tariff threats. In addition, a barrage of key economic data from multiple regions—ranging from Australia and New Zealand employment and inflation reports to Eurozone PMIs—promises plenty of volatility. Below is a concise breakdown of the main events set to dominate market sentiment in the days ahead.
1. U.S. Markets Begin on a Slow Note
Markets in the United States are closed on Monday, February 17, for Washington’s Birthday, giving traders a brief moment to digest last week’s soft retail sales data and ongoing discussions about reciprocal tariffs on autos and other goods. Once markets reopen on Tuesday, attention will quickly shift to:
- Fed Minutes (Wednesday): The Federal Reserve’s January 28-29 meeting minutes could clarify policymakers’ internal debates around inflation, labor-market conditions, and the new wave of trade tensions.
- Fed Speakers: Fed officials including Patrick Harker, Mary Daly, Austan Goolsbee, and Alberto Musalem are slated to speak, providing further insight into economic policy direction.
2. RBA Ready to Cut: Australia’s Spotlight
The Reserve Bank of Australia (RBA) meets Tuesday with a 25-basis-point cut widely expected, marking its first reduction since 2020. Futures markets price in approximately 85% odds that the bank will lower the official cash rate from 4.35% to 4.10%, as Australia grapples with a notable slowdown in inflation.
Guidance is Key:
While a 25-bps cut is expected, the RBA’s forward guidance will drive market reactions. Traders will parse every statement for signs of additional cuts—markets currently anticipate another 50 bps of easing by year’s end.
3. RBNZ: A Bigger Move on the Cards
The Reserve Bank of New Zealand (RBNZ) is expected to take a more aggressive stance when it sets policy on Wednesday. Markets lean toward a 50-basis-point rate cut, which would slash the Official Cash Rate from 4.25% to 3.75%, as the Kiwi economy grapples with recessionary pressures.
4. Europe’s Turn: Flash PMIs and German Elections
Germany remains in the spotlight with its ZEW Economic Sentiment Index and trade data, while the Eurozone braces for February’s flash PMI surveys. A strong showing could boost the euro, while weaker figures may reinforce expectations of further ECB easing.
5. The UK’s Economic Check
The UK’s economic calendar is packed with employment data, inflation reports, and retail sales. Bank of England Governor Andrew Bailey’s speech could provide further clarity on rate policy and the central bank’s inflation outlook.
6. China & Canada: Data in Focus
- China: The People’s Bank of China is expected to hold its loan prime rates steady on Thursday, with January house price data also on tap.
- Canada: Inflation and retail sales reports, alongside a speech from BoC Governor Tiff Macklem, will be closely watched for any policy shifts.
7. Trump’s Trade Policies in Focus
Trump’s evolving stance on tariffs—particularly on auto imports—remains a key market driver. Any unexpected announcements could inject fresh volatility into global markets.
Conclusion
This week’s agenda is packed with high-impact events, from the RBA and RBNZ rate cuts to Fed minutes and global trade developments. Investors must remain agile, as market sentiment could shift rapidly based on economic data and geopolitical developments.
