RBA Holds at 4.35%, Focus Shifts to US CPI After S&P 500 Rally Stalls
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Fazen Markets Editorial Desk
Collective editorial team · methodology
rbaus-cpi
Fazen Markets Editorial Desk
Collective editorial team · methodology
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The Reserve Bank of 2026-nab-survey-rba" title="Australian Business Conditions Edge Higher in July, Confidence Stays Fragile">Australia held its official cash rate at 4.35% on August 11, 2026, as widely anticipated. RBA Governor Michele Bullock emphasized the Board did not discuss a rate cut, only a rate hike or a hold. The central bank revised its macroeconomic forecasts, lowering inflation and raising unemployment projections. The US NFIB Small Business Optimism Index rose to 99.8 in July, beating expectations and hitting its highest level since August 2025. As of 11:55 UTC today, Bitcoin traded at $64,314, down 1.10% over 24 hours, while oil prices held above $82 as traders await the critical US Consumer Price Index report.
The RBA’s decision comes amid a global backdrop of cautious monetary policy as central banks gauge the persistence of inflation. The last time the RBA adjusted rates was a 25 basis point hike in November 2025, bringing the cash rate to its current 4.35%. This current hold extends a period of stability after a rapid hiking cycle that began in mid-2022.
Current market focus is intensely fixed on the upcoming US CPI report, which has the potential to set the tone for Federal Reserve policy and global risk assets. The catalyst for today's subdued price action is the delayed progress on a US-Iran deal concerning the Strait of Hormuz, which has shifted trader attention squarely to domestic inflation data. Geopolitical negotiations between Iran and Oman are reportedly in an advanced stage, but Iran insists the strait remains closed until US demands are met.
These demands include ending threats and aggression against Iran and its allies, lifting naval blockades, withdrawing military forces, paying damages, and removing sanctions. The market’s immediate reaction was a notable decline in oil prices following comments from a Qatari foreign ministry spokesperson. This intertwining of geopolitics and monetary policy creates a complex environment for asset pricing, where traditional drivers are being weighed against supply chain and energy security risks.
The RBA’s updated forecasts provide concrete numbers for the economic outlook. The bank revised its inflation projection lower and its unemployment forecast higher, though specific percentage points were not detailed in the source material. The cash rate assumption for 2027 was revised lower, indicating the potential for just one more rate hike in this cycle if required.
The US NFIB Small Business Optimism Index showed a significant monthly improvement. It rose to 99.8 in July from 97.4 in June, surpassing the 52-year average of 98.0 and the consensus expectation of 97.5. The increase was broad-based, with eight of the index’s ten components improving. The strongest contribution came from hiring plans, indicating renewed intent to expand workforces. Plans for capital expenditure also improved, though uncertainty remains elevated.
Italy reported a trade surplus of €4.2 billion in June, a widening driven by accelerating exports. In the crypto market, Bitcoin’s order flow has improved, supporting its price near the $64,000 level, though the source notes $65,000 remains a key technical test. Singapore's Ministry of Trade and Industry doubled its 2026 GDP growth outlook to a range of 4.5% to 5.5%, attributing the upgrade to an improving technology cycle. Live market data shows Target Corporation (TGT) trading at $152.02, up 3.36% on the day, and the NEAR Protocol token at $1.59, down 3.73% over 24 hours.
| Metric | July 2026 Reading | Prior Month/Expectation |
|---|---|---|
| US NFIB Optimism Index | 99.8 | 97.4 (Jun), 97.5 (Exp.) |
| Italy Trade Surplus (June) | €4.2 billion | Previous surplus not stated |
| Bitcoin Price (Live) | $64,314 | $65,021 (24h prior) |
The RBA’s steadfastly hawkish hold suggests the Australian dollar may find underlying support against major crosses, as the bar for further tightening remains explicitly low. The immediate AUD/USD price action saw a dip on the decision and a recovery during Bullock’s press conference, reflecting the market’s parsing of nuanced guidance. Sectors most sensitive to Australian interest rates, such as banking and real estate, face continued headwinds from elevated borrowing costs, but avoid the immediate shock of a hike.
Globally, the stall in the S&P 500 rally underscores the market’s vulnerability to delayed geopolitical resolutions and impending inflation data. A soft US CPI print could reignite the equity rally, particularly in rate-sensitive growth sectors like technology. Conversely, a hot print could validate the Fed’s cautious stance and pressure valuations. The acknowledged limitation is that today’s calm session and rangebound action may be a false calm, with volatility suppressed solely due to positioning ahead of the CPI release.
Positioning data is not provided in the source, but the flow described indicates a market in wait-and-see mode. The improvement in small business hiring and capex plans is a positive signal for the US labor market and industrial sectors, potentially benefiting companies like Target, which is already showing strong daily performance. The muted outlook for yen buying, as noted by MUFG, suggests the Japanese currency may remain under pressure, benefiting Japanese export equities but creating a headwind for yen-funded carry trades.
The primary immediate catalyst is the US Consumer Price Index report for July, scheduled for release on August 12. The levels for the S&P 500 to watch are the recent highs that marked the stall in its rally and the 50-day moving average, which often serves as dynamic support. For oil, traders are targeting a breakout above $82.55; failure to hold above $82 could see a retest of lower support levels.
The next major central bank decision will be the release of the minutes from the RBA’s August meeting, followed by its next policy decision in September. The UK Office for National Statistics will decide in July 2027 on the plausibility of transitioning to improved labor market data, a long-term administrative watchpoint. Further developments in the Iran-Oman negotiations regarding the Strait of Hormuz will be critical for global oil supply routes and energy security, with any reopening likely putting downward pressure on crude prices.
Australian mortgage holders will see no immediate change in variable interest rates following the RBA's hold. Governor Bullock's statement that only a hike or hold was discussed indicates that rate cuts are not on the near-term agenda. This means the current high-interest-rate environment, which increases monthly repayment burdens, will persist. The revised lower cash rate assumption for 2027 suggests the peak may be near, but relief for borrowers is not expected until inflation is sustainably within the target band.
The July NFIB index reading of 99.8 is above the 52-year historical average of 98.0. It represents the highest level of optimism since August 2025, indicating a meaningful recovery in sentiment. The improvement is notable because it is broad-based, driven by eight of ten components, with hiring plans showing particular strength. This suggests underlying resilience in the US small business sector, which employs nearly half of the private workforce, despite ongoing economic uncertainties.
According to the source material, Iran's demands for reopening the Strait of Hormuz are comprehensive. They include the US never threatening Iran or insulting its sanctities, ending war and aggression against Iran and its allies in Lebanon, Palestine, Yemen, and Iraq, lifting the naval blockade and withdrawing military forces from around Iran, paying damages from past wars and sanctions, lifting all sanctions, and unconditionally releasing frozen Iranian assets. The source characterized these demands as "peanuts," suggesting the reporter views them as a significant barrier to a swift resolution.
The market's immediate trajectory hinges on US inflation data, with the RBA's hold and geopolitical tensions serving as a backdrop for a cautious session.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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