RBA Expected to Leave Rates Unchanged Today

AUD

The Aussie Dollar showing some life and gaining against all of the majors overnight, as improved risk sentiment surrounding a potential US banking collapse which found a resolution, propping up the Aussie and other risk assets.  Asian equities were higher to start the week with the Nikkei adding +0.9% and Hang Seng up +0.3%. The ASX closed the session +0.4% higher with energy outperforming. Yesterday’s Melbourne Institute Inflation Gauge and ANZ Job Advertisements came and went without applause, posting at 0.2% and -0.3% respectively. Markets are likely looking for any surprises at the RBA’s Cash Rate decision this afternoon. Having paused its rate tightening in April to gather more information, and having seen further inflation eases last week, it is widely anticipated that the RBA will leave the cash rate unchanged. RBA boss Phil Lowe will follow up the meeting when he speaks at an RBA Dinner in Perth later tonight.

USD

The AUDUSD firmed up to trade to a high of 0.6668 before easing back to currently trade at 0.6628 even after some stronger Manufacturing data from the US overnight. Wall Street was subdued with all three main bourses closing flat or -0.1%.  US 2- and 10-year yields rallied 13 and 16 bps respectively while crude oil fell -1.4% to $75.70 a barrel. ISM Manufacturing for April rose to 47.1 from 46.3, beating expectations of 46.8 with improvements in the key Prices Paid, Employment and New Orders indices. Market risk sentiment was challenged when First Republic Bank (FRB) announced that they had lost about US$100 billion worth of deposits through the first quarter. A resolution was found for the sinking bank when US regulators accepted JP Morgan’s bid to purchase a substantial chunk of FRB assets, allowing depositors to access their funds again. Tonight will see the release of Jolts Job Openings, which is expected to shrink from 9.93M to 9.74M.

EUR

The AUDEUR also saw a similar spike up to 0.6057 before giving back some of the gains to trade at 0.6037, reclaiming and holding onto the 0.6 handle. The impetus for the movement did not come from any European action as a large part of the region including France, Germany, Italy were all shut to for Labor day. Europe returns tonight with a blast of data, the headlining pieces being Core and CPI Flash Estimate y/y/ which will provide the ECB some last-minute fuel for the fire ahead of the Interest rate decision on Thursday evening. Given there has been no signs of any disinflationary progress (discounting energy and commodity prices) after consecutive months of tightening and hikes, markets are expecting a 25bps move.

GBP

The AUDGBP gaining almost an entire 1% from yesterday morning to reclaim the 0.53 figure and now trading at 0.5304. The UK also celebrated Labor Day and did not have any data releases as a result. Only some lesser tiered data is pending release today and is unlikely to impact markets significantly in a week that has 3 major central bank meetings on the forefront.

NZD

The AUDNZD also got away from its slump to trade higher to 1.0743 this morning with a lack of action from the Kiwis to start the week off. With no data yesterday and today, NZ’s sleepy start will come to a close tomorrow when NZ’s Unemployment Rate and Employment Change q/q figures are posted in the morning. Markets are expecting a steady unemployment rate, at 3.4%, based on quarterly employment growth of 0.4%