RBA Review Reveals 51 Recommendations for Improvement

AUD

The Aussie Dollar is slightly down across the board, though still remaining in a contained range after a quieter session in currency markets limited movement, barring against the NZD. Asian equities were mostly lower on Wednesday with the Nikkei down 0.2% and Hang Seng falling 1.1%. The ASX closed modestly higher, rising 0.1%. Commodities offered no support, Gold lost -0.1%, Iron Ore down -0.6%, whilst copper also lost -0.5%. The only piece of data locally was the Melbourne Institutes Leading Index. It shows the predicted change of direction in the economy based on 9 factors, including; consumer confidence, housing, stock market prices, unemployment expectations, hours worked, commodity prices, and interest rate spreads. Yesterday’s reading came in flat (0.0%), breaking the run of five consecutive readings of -0.1%. Moving forward, the NABs Quarterly Business Confidence index will be released this morning, ahead of RBA Gov Phil Lowe speaking at a media briefing at midday. It is worth keeping an eye over the address, with Lowe and the board under fire with 51 recommendations been made by a major review of the RBA which could lead to a major shake up.  

USD

The AUDUSD sinks lower again but still manages to hold onto the 0.67 handle, trading down to 0.6707 without any major data to attribute to the move. Wall St remained quiet into the close with the NASDAQ flat, the S&P 500 -0.1% and the Dow Jones -0.2%. The US released its Beige Book showed that overall economic activity was little changed over the reporting period with expectations for future growth also unchanged. It was noted that inflation seemed to be slowing with a moderation in wage growth and some further expected declines in input cost pressures. Markets were muted in the aftermath. A decent dump of data tonight, alongside FOMC talk from a handful of speakers ahead of the ‘blackout’ period starting next week for the May Fed meeting. Unemployment Claims, Philly Fed Manufacturing Index, Existing Home Sales are the headline pieces all being released later tonight.

EUR

The AUDEUR also losing some ground, but still being propped up above the 0.61 level to trade at 0.6119. European equity markets closed the day marginally higher across a quiet session, with the CAC and DAX rising +0.2% and +0.1% respectively. Finalised European inflation readings came and went without any attention, both Final CPI y/y and Final Core CPI y/y both were unchanged and as expected, at 6.9% and 5.7% respectively. Europe remains light on the macroeconomic calendar, with German PPI, Euro Trade Balance and Consumer Confidence being released tonight but none are expected to inspire a dramatic change.

GBP

The AUDGBP was the biggest loser overnight trading down to 0.5391 after inflation data proved to continue be a thorn in the UK’s side. While inflationary pressures are subsiding across most of Europe and the US, yesterday the UK posted a 10.1% increase in its headline CPI. It marks the seventh month in double digits and the second significant upside surprise. Alongside the headline figure, Core CPI, PPI Input and Output all exceeded expectations and paints a bleak image for the UK economy. Looking back to Tuesday afternoons employment data, which showed British wages rose faster than anticipated last month, in junction with overnight CPI, it further supports more hikes by the BoE. In this regard, the market is currently pricing in a 99% chance of a 25 bps rate hike from the Bank of England at its next meeting. No further data from the Britts until Friday afternoon Retail Sales.

NZD

The AUDNZD was slightly depressed until NZ released some lower inflation data this morning, picking up to trade at the highest level seen in 2 weeks, currently sitting at 1.0881. The first quarter (Q1) print of New Zealand’s headline inflation poured cold water on the face of the policy hawks by offering a negative surprise. CPI printed at 1.2% against an expected 1.5%, falling short of the previous reading of 1.4%. It is worth noting the sharp fall off after RBNZ Governor Adrian Orr raised interest rates surprisingly by 50 bps to 5.25% in its last monetary policy meeting held on