RBA Board Meeting Minutes Due Today
AUD
Small movement in Aussie dollar pricing overnight as a quiet day for data and news spurred no drastic movements. The ASX gained 0.6% in yesterday’s session, while Asian equities started the week largely in the opposite direction with the Hang Seng and Nikkei giving up 1.1% and 1% respectively. No major moves in Aussie-linked commodities either with Gold and Silver flat, Iron and Copper both down -0.6%. The RBA Board meeting Minutes are being released at 11:30 this morning which may kick the volatility into gear; the 25bps increase in the cash rate to 4.10% 2 weeks ago surprised markets and Governor Lowe’s rhetoric on the outlook for inflation and monetary policy was hawkish. The Governor noted that the upside risks to the inflation outlook had increased due to a confluence of factors: a higher-than-expected award wage increase; higher public-sector wages growth policies; strong unit labour cost growth; sticky services inflation overseas; and the pick-up in housing prices. Given the Governor’s comments since the Board meeting, the Minutes are likely to be relatively hawkish. Markets currently expect the cash rate to reach ~4.60% by October. RBA Deputy Governor, Michele Bullock, will also speak following the release. Also, China will announce its key lending rate, the Loan Prime Rates, this morning.
USD
AUDUSD is slightly down this morning, opening at 0.6851 after a quiet day in the US which was enjoying a new bank holiday called Juneteenth. Minimal movements in Wall Street also with the S&P 500 losing 0.4%, Dow Jones -0.3%, and NASDAQ closing -0.7%. Plenty of data coming up to make up for the quiet start to the week with the major points being Fed Chairman Powell testifying to a Government Committee about the Semi-Annual Monetary Policy Report at midnight on Wednesday. Unemployment Claims and Flash Manufacturing PMIs and Flash Services PMIs for the US are printing in the later half of this week.
EUR
The AUD opens slightly lower against the Euro today, sitting in familiar territory at 0.6270. Overnight, the ECB’s Schnabel gave a speech in Luxembourg and said the risks to the inflation outlook are tilted to the upside and the ECB needs to err on the side of doing too much. Schnabel added that they need to keep raising rates while there’s a limit to how long inflation can stay above 2%. A few small pieces of Euro data trickle in today with the German PPI m/m, expected to see a -0.7% from the 0.3% gain from last month. And the Eurozone Current Account.
GBP
The Aussie and Pound Sterling are flat over the last trading session, opening this morning at 0.5358. The only piece of data out of the UK was the Rightmove HPI m/m, which came in at 0%, off the back of the previous months +1.8%. A big week for the Pound as CPI y/y is released tomorrow, expecting a painfully high 8.4%, but hopefully down from last month’s even worse 8.7%. Then we have the UK’s next Official Bank Rate decision, with markets currently pricing in a 25bps increase from 4.5% to 4.75%.
NZD
A small 15bps gain for the AUDNZD in the last 24 hours, currently sitting at 1.1045. The BusinessNZ Services Index printed yesterday showing an improvement in purchasing managers sentiment about the economy, moving from an indexed number of 50.1 to 53.3. Westpac Consumer Sentiment also showed a boost in economic perception by the consumer base moving from 77.7 to 83.1. These two stronger survey-based numbers are a positive sign after New Zealand officially moved into a recession last week with their GDP printing at -0.1% for the first quarter of 2023. New Zealand related data for the rest of the week is the GDT price index tomorrow and Trade balance and Credit Card Spending y/y on Thursday.