Morning Note: RBA Holds Rates; Trump Tariffs Hit; Tesla Dips on Musk News

RBA Surprises with Rate Hold Amid Split Votes

The Reserve Bank of Australia (RBA) surprised markets on Tuesday by holding its cash rate steady at 3.85%, defying widespread expectations of a rate cut. Wrapping up its two-day policy meeting, the central bank cited a cautious stance on inflation, with most board members preferring to wait for more data to confirm a sustained disinflation trend. In a rare split decision, six members voted to keep rates unchanged, while three pushed for a cut. This divergence underscores the uncertainty surrounding the inflation outlook.

Market pricing now suggests an 85% probability of a rate cut to 3.60% at the RBA’s upcoming meeting on August 12. Additionally, expectations for the terminal rate have shifted, with forecasts now favouring a bottom of 3.10% instead of the earlier projection of 2.85%. This shift came after the latest monthly inflation data showed the trimmed mean falling to 2.4% in May, its lowest level in three and a half years and beneath the midpoint of the RBA’s 2–3% target band.

(AUD/USD Daily Chart, Source: Trading View)

From a technical analysis perspective, the AUD/USD currency pair has been in a bullish trend since April 2025, as indicated by a series of higher highs and higher lows. However, three consecutive bearish candles have recently pushed the pair lower, causing it to close below the resistance zone of 0.6520 – 0.6560. The pair may potentially retest this resistance area to determine its next move. If it gets rejected again, a further decline may follow.

Dollar Jumps as Trump Unveils New Tariffs

The U.S. dollar surged sharply on Monday following President Donald Trump's announcement of new tariffs set to take effect on August 1. Trump revealed the measures through letters posted on his social media platform, stating that a 25% tariff would be imposed on countries including Japan and South Korea. Similar letters were sent to the leaders of Malaysia, Kazakhstan, Myanmar, South Africa, and Laos, outlining tariff rates that closely reflect those previously proposed in April.

These actions come as the 90-day moratorium on Trump’s “Liberation Day” reciprocal tariffs nears its end on Wednesday, raising the risk of broader trade disruptions. In addition, Trump has threatened an extra 10% tariff on countries he claims support the “anti-American” stance of the BRICS emerging economies, signalling potential escalation in trade tensions with U.S. partners.

(EUR/USD Daily Chart, Source: Trading View)

From a technical analysis perspective, the EUR/USD currency pair has been moving in a bullish trend since January 2025, as indicated by the formation of higher highs and higher lows. Recently, it broke above the swap zone of 1.1470 – 1.1510, signalling that bullish momentum remains in control. This valid upward movement may continue to drive the pair higher, potentially retesting the resistance zone at 1.1850 – 1.1900.

Tesla Shares Slide on Musk's 'America Party' Plan

Tesla shares tumbled early Monday after CEO Elon Musk announced plans to launch a new political party, reigniting investor concerns that his political ambitions could distract from Tesla’s core business. The stock fell to $291.00 in premarket trading, down 7.13% as of 4:27 a.m. ET, following Musk’s revelation that the newly proposed "America Party" would target key congressional seats to influence national policy.

Musk's renewed political involvement comes after his controversial stint with the Trump administration’s Department of Government Efficiency, a move that drew heavy criticism from shareholders. While his departure in May had calmed markets and stabilised Tesla's share price, his re-entry into the political arena has reignited fears of overextension. The move has also sparked fresh conflict with former President Donald Trump, who slammed Musk's initiative as “ridiculous” and claimed the Tesla CEO had “gone completely off the rails.”

(Tesla Daily Price Chart, Source: Trading View)

From a technical analysis perspective, Tesla’s share price has been in a bullish trend since April 2025, as reflected by a series of higher highs and higher lows. However, the price was recently rejected twice from the resistance zone of 354 – 364, forming a notable double top pattern, an early sign of potential trend exhaustion.

This formation may lead to a downward move toward the swap zone of 277 – 287, where the next directional bias could be determined. If the price finds support at this level and rebounds, it could attempt another breakout above the resistance zone. Conversely, a failure to hold this zone may allow bearish momentum to take over, potentially shifting the trend back to the downside.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.