RBA Rate Decision at 2.30pm Today
AUD
The Aussie dollar continues its upward trend from the end of last week, posting minor gains against the major currency pairings in what was a more subdued trading session. Asian equities were mostly higher to start the week with the Nikkei up 2.2% and Hang Seng adding 0.7%. The ASX closed 1% higher with consumer discretionary stocks outperforming, up 1.8%. Yesterday we had some minor data released, with Company Operating Profits q/q missing the expected 2.1%, coming in at 0.5% and failing to move markets. The main event is on the cards today with economists around the world looking towards Australia at 2:30pm, when the RBA will release a statement along side the Cash Rate decision. Economists are mixed as to whether the RBA will raise for the 12th time since May last year and futures markets are on the side of no change today. Weighing on the RBA's decision will be last week's inflation data which showed an increase in the yearly trend, as well as Friday's surprise increase in the minimum wage. On the other hand, the RBA has said the rate was data dependant and may wish to observe next week's employment data before deciding on the merits of a further rate hike. Chance for volatility at 2.30pm either way.
USD
AUDUSD pairing opens slightly up at 0.6616, jumping over 50 pips in a 3 hour period from 10:00pm last night. A relatively subdued session on Wall St saw all three indices closing fractionally lower on the day, with Dow Jones the lowest at -0.6%. U.S. 2 year yields were unchanged while crude oil was flat at $71.80 a barrel. Some cracks are starting to appear in the US economy which is considered currently amongst the world's strongest, beginning with last week's shaky employment report and now with ISM Services printed overnight at 50.3 for May, down from 51.9 and well below expectations of 52.4. April Factory Orders rose 0.4% to fall well short of expectations of 0.8%. No data of note set for release in the US tonight.
EUR
AUDEUR opens up at .6176, similarly to the USD showing solid gains overnight before subsiding into current level this morning. European markets sliding lower into the close with the CAC shedding almost 1% to be the hardest hit and the DAX lost 0.5%. European PMIs were released, with the Euro-zone PMI for May coming in at 55.1, just below estimates of 55.9. Germany and France, the biggest two economies in Europe also showed a deterioration in Services PMI which whilst still in expansionary territory, are getting closer to the magic 50.0 threshold. ECB President Lagarde spoke before the Committee on Economic and Monetary Affairs and strongly suggested that the rate hikes were not yet finished. No major market movers set for release today, with German Factory Orders m/m tipped to come in at 2.7%, a huge jump from may’s -10.7%. Retail Sales m/m are also expected to rise from the previous -1.2% to 0.2%.
GBP
AUDGBP opens slightly up at 0.5323, continuing the late-night trend of the other currency pairings. British equities remained flat, with the FTSE coming in -0.1%. The quiet week for the Pound began with Final Services PMI’s coming in at 55.2, just tipping the expected 55.1 and shaking the global trend of deterioration in Services performance numbers. BRC Retail Sales Monitor y/y was released this morning, missing the forecast of 5.2%, coming in at 3.7%. Construction PMI releasing later tonight, forecast to come in at 50.9, unlikely to shifts markets dramatically.
NZD
AUDNZD pairing has stayed quite flat since Friday night, trading in a 30 pip range and opening only slightly higher at 1.0900 this morning. Yesterday the Kiwis enjoyed a day off in celebration for the King's Birthday. Today they’re back with ANZ Commodity Prices m/m set for release at 11:00am. The previous reading came in at -1.7%, however there is no forecast being predicted. The Kiwis will also be looking towards Big Brother’s Cash Rate announcement today, which has the habit of dragging NZD around a little bit.