EURAUD EUR/AUDOANDA:EURAUDShavyfxhubThe current head of the European Central Bank (ECB) is Christine Lagarde. She has been serving as ECB President since November 2019, Lagarde has emphasized her commitment to steering the ECB through complex economic challenges, including inflation control and adapting monetary policy to evolving global conditions. the current key interest rates set by the European Central Bank (ECB) are as follows: Deposit Facility Rate: 2.00% Main Refinancing Operations Rate: 2.15% Marginal Lending Facility Rate: 2.40% These rates were last adjusted on June 11, 2025, when the ECB lowered the key interest rates by 25 basis points (0.25%) to reflect the updated inflation outlook and economic conditions. Additional Context: Inflation in the Eurozone is currently around the ECB’s medium-term target of 2%. The ECB’s Governing Council decided on the rate cut based on a downward revision of inflation projections for 2025 and 2026, partly due to lower energy prices and a stronger euro. The next ECB interest rate decision is scheduled for July 24, 2025. ECB Executive Board member Isabel Schnabel recently indicated that the bar for further rate cuts remains “very high” as the economy is holding up well. Summary Table of ECB Key Rates (as of June 11, 2025) Rate TypeInterest Rate (%) Deposit Facility Rate2.00 Main Refinancing Rate2.15 Marginal Lending Rate2.40 the Reserve Bank of Australia (RBA) cash rate remains at 3.85%. This decision was made at the RBA’s July 8, 2025 meeting, where the board chose to hold rates steady despite widespread market expectations of a cut to 3.6% Key Points: The RBA has signaled that an easing cycle is likely coming, but it wants to wait for the release of the full quarterly inflation data at the end of July to confirm that inflation is on track to decline sustainably toward the target range (2–3%). Inflation has moderated, with trimmed mean inflation at 2.4% in May, within the target band. The board was divided: six members voted to hold rates, while three favored a cut. Market expectations now price in about an 85% chance of a 25 basis point cut to 3.60% at the next meeting on August 12, 2025. RBA Governor Michele Bullock emphasized that the bank is reacting to domestic inflation and employment data and is prepared to adjust policy as needed, but is not holding rates high “just in case.” Summary Table DateCash Rate (%)Board DecisionNext Meeting Expectation July 8, 20253.85Hold rates steadyLikely 0.25% cut at August 12, 2025 Additional Context The RBA’s cautious approach reflects the need to confirm inflation trends before easing. The decision surprised markets that had anticipated an immediate cut due to slowing consumer spending and inflation within the target range. Governor Bullock acknowledged the challenges for borrowers but noted that housing prices, not just interest rates, affect affordability. EURAUD TRADE MATHE EU10Y=2.686% ECB RATE =2.0% AU10Y= 4.362% RBA RATE =3.85% INTEREST RATE DIFFERENTIAL= EUR-AUD=2.0-3.85=-1.85% EURO BASE CURRENCY AND AUD QUOTE. FAVOUR AUD CARRY TRADE.THE TARRIF HAMMER ,AUDSTRALIA AND CHINA TRADE REMAINS A KEY TOOL FOR AUD STRENGTH. BOND YIELD DIFFERENTIAL= EURO-AUD =2.686%-4.362%=-1.676 FAVOUR AUD . BUT EURO ZONE ECONOMIC OUTLOOK WILL OFFSET YIELD AND BOND ADVANTAGE AS CHINA AUSTRALIA COMMODITIES MARKET IS DEPENDING MORE ON CHINA ,SO GLOBAL RESTRICTION ON EXPORT WILL GIVE EURAUD LONG POSITION. #EURAUD