07:55 AM EDT, 07/07/2025 (MT Newswires) -- Societe Generale pencils in a 25bps rate cut for the Reserve Bank of Australia (RBA) this week to 3.60% after inflation slowed to 2.1% year over year in May and core cooled to 2.4%.

The RBA is slated to release its policy statement at 12:30 a.m. ET on Tuesday

The implied odds are stacked at 95% in favor of a cut, wrote the bank in a note to clients. Will the underwhelming Q1 gross domestic product (+0.2% quarter over quarter and 1.3% year over year), benign inflation and tariff angst motivate the RBA to signal further easing in H2, asked SocGen.

The Australian dollar (AUD) has struggled to keep up with the European currencies in H1, but technically the picture for the currency was looking more promising following the monthly close above 0.6500, stated the bank. Lower oil prices and the bullish exhaustion in industrial metals are prompting profit taking ahead of the RBA on Tuesday.

The sizable short base among hedge funds is an upside risk if bullish momentum were to gain traction, added the bank. The third plenum of the Chinese Communist Party could be another signpost later this month (July 15-18).

The Reserve Bank of New Zealand (RBNZ) should keep rates on hold at 3.25% at 10 p.m. ET on Tuesday, according to SocGen.