While the Aussie dollar was very strong in overnight trade, it had little to do with the market’s expectation from the RBA today.

The big mover yesterday was the USD, which fell on the back of more Trump tariffs, this time aimed at Brazil and Argentina. That sent the Aussie higher and through the key 0.6800 level, but it will be the RBA today that really decides its fate.

That said, there is no expectation of any change in official interest rates, but much of the attention will be on the statement and what Governor Lowe is thinking going forward. It is widely expected that there will be further cuts, but the next one is most likely going to happen in February. That would take the OCR to 0.5% – another record low.

However, there are some problems for Lowe and his men with this plan. With rates so low, we are starting to see another asset bubble getting started. That’s very clear with house prices jumping higher at a record pace. While that is not the primary concern for Lowe, it would worry him.

We’ve only just seen some hint of an uptick in jobs with a mixed result last month and a jobless rate still above 5.0%.

The AUD/USD has been relatively soft recently with markets still thinking there will be more downside on rates. But it also hasn’t been helped by a strong USD dragging it down as well.

So today all the focus is on the statement. Any more hints of a cut could see a sharp move lower. No one is that clear on what Lowe is thinking, so there could be some volatility ahead.