Market Highlight 05.05.2026

The Reserve Bank of Australia is expected to maintain its position as one of the most hawkish Central Banks, with a third consecutive rate hike likely to be delivered this morning. This stands in contrast to other major Central Banks, which have mostly chosen to keep policy unchanged while assessing the impact of the U.S - Iran conflict. The market is currently expecting the RBA to raise its policy rate to 4,35% at the May meeting, thereby reversing the entire easing cycle implemented last year. Although Central Banks often choose to look through temporary supply shocks, the spillover effects from the war in Iran are creating greater challenges for the Reserve Bank of Australia, as inflationary pressures are expected to remain elevated in the coming quarters. Shipping costs and airfares have already risen sharply, while input costs for plastics, polymers, fertilizers, detergents, and paint are also expected to increase.

Total credit in Australia rose 8,1% YoY in March, with lending to property investors up 9,6% and business credit increasing by nearly 10%. The labor market has remained strong, with the unemployment rate at a record low of 4,3%, while household spending continues to hold up well. However, manufacturing activity data released last Friday showed that factory output declined for a third consecutive month in April, as businesses faced rising prices and supply disruptions caused by higher fuel costs.

The USD Index rose nearly 0,3% yesterday as tensions in the Strait of Hormuz continued to escalate again. Domestically, interbank USD/VND fell by around VND 10 in the first trading session after the holiday and closed the day at 26.340. The effective daily ceiling stood at 26.367.

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