Markets Brace for RBA Decision and US Services PMI Looms

Key takeaways

• Macro risks and policy divergence in focus: Markets are bracing for the Reserve Bank of Australia rate decision, while strong US data reinforces a “higher-for-longer” Fed stance. Meanwhile, escalating US–Iran tensions have pushed oil prices higher, keeping geopolitical risk elevated.
• Cross-asset pressure from rising yields: Elevated real yields are weighing on growth stocks and gold, while the US dollar holds firm within its range. Oil remains supported above $100, maintaining a bullish structure amid supply disruption concerns.
• Key market drivers ahead: The spotlight is on the RBA decision, US ISM Services PMI, and Fed commentary, with FX (especially AUD and JPY), equities, and commodities poised for volatility depending on policy signals and macro data.
• Chart of the day: WTI crude minor bullish structure remains intact above $100.20 key support. Next intermediate resistances at 112.84 and $116.56/119.54

Top macro headlines

• RBA rate decision in focus: Markets are fully priced for the Reserve Bank of Australia to hike rates today by 25 bps to 4.35% on the cash policy rate (third consecutive time), the accompanying statement and press conference are crucial for hints on whether the RBA will remain on a longer hawkish path.
• US manufacturing resilience: Recent factory orders data for March outperformed expectations (actual: 1.5% m/m, consensus: 0.5%, Feb: 0.3% revised from 0%), reinforcing the “higher-for-longer” narrative for the Federal Reserve and keeping US Treasury yields elevated.
• Middle East peace talks stagnate: The month-long US-Iran ceasefire agreement, since 8 April, is now in jeopardy as the US and Iran exchanged fire in the Persian Gulf over the US Navy’s facilitation of the passage of two US-flagged ships through the Strait of Hormuz. Iran also attacked the UAE with ballistic missiles, cruise missiles, and drones. Brent crude rallied by 4.5% to close Monday’s US session at $114.07/bbl.
• Yen intervention watch: Following last week’s dramatic moves where the USD/JPY plunged 2.4% on Thursday, 30 April, from a high of 160.73, the pair has stabilized near 156.50, but traders remain cautious of potential secondary intervention from Tokyo during the London/NY overlap.

Key macro themes

• Monetary policy divergence: A clear divide is emerging between the Fed’s wait-and-see approach and the potential for selective tightening in APAC (Australia/Japan) to combat imported inflation.
• The return of real yields: As inflation expectations stabilize but nominal yields remain high, rising real yields are starting to pressure speculative growth stocks and non-yielding assets like gold. The recent rebound (Wed to Fri) seen in gold (XAU/USD) has fizzled out at US$4,645, right below its 20-day moving average (US$4,700), acting as a key near-term resistance.
• Supply chain realignment: Weekend discussions on trade tariffs continue to drive institutional rotation into domestic-centric industrial plays and away from globalized consumer staples.

Global market impact (last 24 hours)

• Equities: S&P 500 futures are flat in early trade in today’s early Asian session after the cash index slipped 0.4% on Monday. Technology stocks’ outperformance is cooling as semiconductor stocks digest recent gains.
• Fixed Income: The US 10-year yield is hovering near 4.15%. Curve inversion remains a primary concern for credit markets.
• FX: The DXY rose for the second consecutive session, holding above its 97.95 key near-term support, but remains capped below its 99.16 near-term range resistance since 8 April. EUR and GBP trimmed last Thursday’s gains on rising geopolitical tensions in the Middle East. AUD shed -0.5% to 0.7167 ahead of the RBA decision but still holding above its 20-day moving average at 0.7145.
• Commodities: Brent and WTI crude are steady at around $113/bbl and $107/bbl. Gold (XAU/USD) remains soft after Monday’s 1.9% decline. It is now trading at $4,521, testing last Wednesday, 29 April low of $4,510.

Asia Pacific impact

• Stock markets: The ASX 200 is trading cautiously ahead of the RBA. The Hang Seng Index and China A50 may find support above 25,675 and 15,375, respectively, despite a firm yuan, given elevated oil prices. Japan is closed for a holiday today.
• Currencies: The AUD/USD is the most volatile pair in the region, currently testing 0.6620. The JPY is largely rangebound but remains the primary source of volatility in regional carry trades.
• Regional Outlook: The resilient China manufacturing PMI data (staying above 50) released last week is providing a temporary buffer for Southeast Asian exporters, despite the high global sovereign bond yields environment.

Top 4 Events to watch today

1. RBA Interest Rate Decision (AU) – 12:30 pm SGT: Market is expecting a third 25 bps hike to 4.35% on the cash policy rate, reinforced by renewed inflation pressures. Impact: AUD pairs, ASX 200.
2. RBA Press Conference (AU) – 1:30 pm SGT: Looking for clues whether the current interest rate hike cycle will extend further. Impact: AUD pairs, ASX 200.
3. ISM Services PMI (US) – 10:00 pm SGT: A critical gauge of the dominant sector of the US economy (consensus: 53.7, Mar: 54.0) Impact: USD, US stock indices, Treasuries.
4. Fed Bowman Speaks (US) – 10:00 pm SGT: Seeking clues on the Fed’s monetary policy stance on elevated oil prices. Impact: Short-end Treasuries, USD.

Chart of the day – WTI crude remains bullish above $100.20

Fig. 1: West Texas oil CFD minor trend as of 5 May 2026 (Source: TradingView)

The price actions of West Texas oil CFD (a proxy of WTI crude futures) remain in a short-term bullish structure as it continues to oscillate within a minor ascending channel in place since 17 April 2026 low.

In addition, the hourly RSI momentum indicator remains supported by an ascending trendline above the 50 level, which suggests short-term bullish momentum remains intact.

Watch the $100.20 short-term pivotal support to maintain a bullish bias. A clearance above $112.84 near-term resistance sees the next intermediate resistances coming in at $116.56/119.54 ( the range top of 9 March/7 April 2026).

However, a break and an hourly close below $100.20 jeopardizes the bullish tone for a minor corrective slide to retest the intermediate supports at $95.10 and $90.50 (also close to the 50-day moving average).