RBA Says No Rate Hikes Until 2024
AUD
The AUD displayed some resilience overnight as it posted minor gains across most major currency pairs. Local equity markets had a mixed session of trading, the ASX and Nikkei both posting losses, while the Shanghai Comp gained +0.3%. Commodities followed suit with Gold, Silver and Copper both posting losses, while Iron Ore was the only notable gain of 0.3%. Yesterday the RBA kept its benchmark interest rate near 0.10% and announced no change in its bond purchasing targets while signalling a possible decision in July. Today Australian GDP is the major event on the domestic data calendar, following the release of partial indicators, Macquarie Strategy have upgraded our Q1 GDP growth estimate to 1 1/2% q/q (from +1.3% q/q initially). A rise of this magnitude would see GDP regain its pre-COVID level. The strength of responses to business surveys is consistent with a strong rise in domestic demand in the quarter, though that could possibly be hampered by a drag from net exports.
USD
The AUDUSD had a relatively subdued session overnight, currently trading at 0.7753 at the time of writing. US equities had next to no movement overnight, even the better-than-expected ISM data from the US wasn’t enough to help US Equities, all three majors finishing flat, with Dow Jones being the only gainer of 0.1%, while Oil was up 2.5% to $68.80 a barrel after a bullish forecast from OPEC. There was little to no market reaction from the unchanged record low RBA rate decision yesterday, AUD/USD traders likely awaiting the full markets response to the recent catalyst concerning the escalating inflation pressure and tapering. To the data, no-noteworthy data today with traders awaiting Thursday’s US Nonfarm Payrolls as well as the next FOMC.
EUR
The AUDEUR pair moved slightly higher overnight, coming in to trade at 0.6344 at the time of writing. European Equities had a positive session of trade, CAC was up 0.7%, the DAX was up 0.9% and Eurostoxx 600 closed at a new all-time high of 450.10 (0.75%). Yesterday Europe saw the release of the May manufacturing PMI numbers. Spain kicked things off at 59.4 (59.3 expected) with Italy coming in at 62.3 (62.1 expected). France printed at 59.4 (59.2 flash) Germany 64.4 (64.0 flash) with the EZ reading of 63.1 the highest since the survey began in 1997. Plenty of data this evening with German Retail Sales, Spanish Unemployment Data and European PPI all due this evening.
GBP
The AUDGBP had modest gains with the pair climbing to as high as 0.5480, before coming back to trade at 0.5476 at the time of writing. UK Equities had a strong session of trading overnight, the FTSE was up 0.82% and the UK 100 was up 0.77%, both major indexes well within range of their all-time highs, Equities likely supporting the recent weaker UK Markit Manufacturing PMI yesterday, which resulted in 65.6 in May from 66.1. Not much data on the docket this evening, further data tomorrow may move market sentiment as the UK release Final Services PMI and Gov Bailey speaking on Friday.
NZD
The AUDNZD pair had a strong session overnight coming in to trade at 1.06887 at the time of writing, pulling away from the three month lows just above the 1.06 level. No-noteworthy data today, ANZ commodity prices due tomorrow along with Gov Orr speaking on Friday.