The RBA cut rates this morning. The focus now shifts to today's stats out of the EU and U.S and FED Chair Powell.
The economic calendar was on the busier side once more this morning.
Australia current account and retail sales figures provided direction in the early part of the day. At the start of the day, the UK’s BRC Retail Sales Monitor added to the negative market angst.
Outside of the stats, the RBA delivered its June monetary policy decision and rate statement.
Retail sales fell by 0.1% in April, coming up short of a forecasted 0.2% increase. Retail sales had increased by 0.3% in March. According to figures released by the ABS, the decline was attributed to falls in,
The current account deficit narrowed from A$6.3bn to A$2.9bn in the 1st quarter, according to figures released by the ABS. Forecasts were for a narrowing to A$2.5bn.
The Aussie Dollar moved from $0.69654 to $0.69657 upon release of the figures that preceded the RBA policy decision.
The RBA cut rates by 25 basis points to 1.25%, which was in line with market expectations. Salient points from the latest RBA rate statement included:
The Aussie Dollar moved from $0.69731 to $0.69929 upon release of the rate statement before easing back. At the time of writing, the Aussie Dollar was up 0.09% to $0.6983.
At the time of writing, the Kiwi Dollar was down by 0.12% to $0.6590, while the Japanese Yen was up by 0.14% to ¥107.92 against the U.S Dollar. Risk off sentiment provided direction for the majors in the early part of the day.
It’s a relatively busy day ahead on the economic calendar. Spanish employment change figures are due out early on. Later in the morning, the Eurozone’s prelim inflation figures and unemployment rate are due out.
Key drivers on the day will likely be the Eurozone’s core annual inflation rate and April unemployment rate. While the unemployment rate is expected to hold steady at 7.7%, the markets forecast that core annual rate of inflation will slow from 1.7% to 1.3%, which is EUR negative.
Outside of the stats, risk aversion, bets on the FED and ultimately any moves in the bond markets will continue to impact.
At the time of writing, the EUR was up 0.08% to $1.1250.
The UK’s May construction PMI is due out later this morning. While forecasts for the PMI to hold steady at 50.5, weak numbers could test the Pound’s resilience following the poor manufacturing PMI numbers on Monday.
Outside of the numbers, UK politics and sentiment towards Brexit will continue to play a hand.
At the time of writing, the Pound was up 0.03% to $1.2668.
It’s a quieter day on the economic calendar. April factory orders and orders for non-defense capital goods excl. aircrafts due out this afternoon.
We can expect the markets to be particularly sensitive to any disappointing numbers on the day.
On the policy front, FED Chair Powell will speak ahead of the stats. It remains to be seen whether the FED Chair changes his stance on the economy and policy.
At the time of writing, the Dollar Spot Index was up 0.04% to 97.183.
It’s another quiet day ahead, with no material stats due out.
Stats out of the U.S and any chatter from the U.S administration on trade will dictate direction through the day.
The Loonie was down by 0.04% to C$1.3443, against the U.S Dollar, at the time of writing.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.