Today's RBA Rate Decision a Close Call
AUD
Small movements in the Aussie dollar against the majors, with little data in the lead up to today's interest rate decision from the RBA. The RBA Board hiked last month after noting that the balance of risks on inflation had shifted to the upside and rising housing prices and stabilising home loan approvals “suggested that financial conditions may not have been as tight as they had previously judged”. Throwing a spanner into the works however, the Governor’s comment in the post-meeting statement that “some further tightening of monetary policy may be required” was missing from the Board Minutes. Information over the past month has included a robust labour market report for May, evidence that underlying inflation in Australia has remained sticky, and further strengthening in housing price growth. In contrast, firms have reported a noticeable slowing in forward orders and indications are that GDP growth has remained minimal in the current quarter. The Official Cash Rate is currently at 4.10%, and the majority of the market has penciled in a hold at this level as the most likely outcome.
USD
The AUDUSD is up slightly on yesterday’s levels, gaining about 0.5% throughout a choppy day – currently sitting at 0.6670. A few pieces of data from the US last night, the ISM Manufacturing PMI was released, showing a miss of the 47.2 expectation, printing at 46. ISM Manufacturing Prices also missed, printing at 41.8 vs the 44 expectation. A quiet overnight trading session ahead of the July 4th U.S. holiday saw all three U.S. equity markets post modest gains.
EUR
A small 0.2% gain for the AUDEUR pair for the beginning of the week, currently sitting at 0.6110. A few pieces of manufacturing data out of the Eurozone yesterday evening, Final European Manufacturing PMI data for June was released with the results mixed. France's equivalent was revised up to 46.0 from 45.5 with Germany's revised down to 40.6 from 41.0. This saw the EU-wide figure slip slightly from 43.6 to 43.4. Two small pieces of data today, German Trade Balance, expectation an increase in imports at 17.3B from 18.4B previous, and Spanish Unemployment Change, expecting -63.5k from -49.3k last month.
GBP
The AUD gains slightly against the Pound Sterling, this pair seeing a gradual climb throughout the day of about 25bps before coming off slightly to the current level of 0.5253. Only final UK manufacturing released out of the UK last night, which was revised up to 46.5 from 46.2. Also a quiet day ahead for UK data, with only the 30-year bond auction tonight.
NZD
The AUD made small losses against the Kiwi last night, currently sitting at 1.0842. The New Zealand Institute of Economic Research released their business confidence index this morning, which surveys 4,300 businesses to rate the 6 month economic outlook. This indexed figure saw a slight improvement from -66 previous to -63 today.