RBA's Meeting Minutes Today
AUD
Quiet trading and lack of international data prints saw the AUD slide a little lower overnight, opening slightly down against all majors bar the NZD. Commodities came through mixed with Gold flat, Silver -0.5%, Iron Ore +1%, and Copper +1%. Asian equities closed in the green with the Shanghai Comp +0.5%, Nikkei +0.7% and the ASX closing +0.6% higher as energy and materials outperformed. At 10:30am we'll see Westpac Consumer Sentiment ahead of the AUD's main event for the week: The RBA Monetary Policy Meeting Minutes for May. At the May Meeting, the RBA Board’s communication became slightly more hawkish, adding that it "will remain vigilant to upside risks" to inflation given inflation has been “declining more slowly than expected" while acknowledging "stronger labour market conditions". While Governor Bullock expressed the view that the cash rate is sufficiently restrictive to achieve the inflation target over a reasonable timeframe, we will see in the Minutes whether the Board sees more of a risk that rate hikes are needed. That said, this information is becoming somewhat dated given weaker data (labour market, NAB business survey and wage growth) since the Board meeting.
USD
The AUDUSD opens lower this morning at 0.6671 dropping late last evening after commentary from FOMC Members Mester, and Jefferson stated that the Federal Funds Rate was already in restrictive territory, and they would need further time before any decisions on the rate would be made. Wall Street closed mixed with the Dow Jones -0.5%, S&P 500 +0.1%, and the Nasdaq +0.7%. No major news out of the US, with the FOMC members Waller, Barkin, Williams and Bostic set to speak later this evening.
EUR
The AUDEUR dropped slightly overnight, opening this morning lower at 0.6142. Eurozone equities closed in the green with the DAX +0.3 and CAC +0.3%. Another relatively subdued day for data releases out of the Eurozone with German PPI m/m set for release this afternoon at 4pm, however the main focus today will be on the ECB President Lagarde’s speech at the Frankfurt School of Finance, at 6pm. The Current Account will also be released at the same time, which is forecasted to increase from 29.5B to 30.2B.
GBP
The AUDGBP reached 0.5278 yesterday afternoon before falling steadily throughout the evening, touching 2-week lows of 0.5226 before retracing early this morning to open at 0.5247. This comes despite the Bank of England's Broadbent stating that there could be a possible rate cut in the UK Summer. UK equities closed flat. No major news set for release with only CBI Industrial Order Expectations later this evening at 8pm, however all eyes will be focused on the BOE Gov Bailey’s speech early tomorrow morning, and the CPI y/y tomorrow at 4pm which is forecast to drop from 3.2% to 2.1%. It’s no exaggeration to say that this week’s UK inflation data will make or break a June rate cut from the Bank of England, as markets are pricing 60% chance of a cut.
NZD
The AUDNZD coupling opens flat this morning at 1.0920, having recovered from 1.0910 lows earlier this morning. Tomorrow will be a big day for our Kiwi neighbours with their Official Cash Rate set for release. Forecasts expect the RBNZ to keep the OCR at 5.5% and reiterate its view that the OCR will need to remain at 5.5% for “a sustained period” to bring inflation back within the 1-3% target range. It is expected the RBNZ will reiterate that while economic growth remains weak, inflation pressures remain elevated.