> AU April Building Approvals : -8.6% v. -9.9% exp.
> AU Q1 Company Operating Profits : -0.3% v. 3.6% exp.
> AU Q1 Current Account : 18.3Bio v. 17.8Bio exp.
> CN May Caixin Manufacturing PMI : 52.0 v. 52.1 exp.
> AU RBA Rate Statement & Decision : 0.10% (no change) v. 0.10% exp.
> EU May H/Line CPI & Core CPI Flash Estimate : 2.0% & 0.9% v. 1.9% & 0.9% exp.
> CA March GDP : 1.1% v. 1.0% exp.
> US May Final Manufacturing PMI : 62.1 v. 61.5 exp.
> US May ISM Manufacturing PMI : 61.2 v. 60.8 exp.
Overnight Headlines (BBG)
> The GBPUSD was the biggest story, with reports that the UK is seeing a rise in a new COVID19 variant while the country reported its first day with zero daily deaths since the outbreak began
What you need to know
Although we still sit well within the recent range above the 0.7700 handle for the AUDUSD, the pair saw some whippy moves as the GDP forecasts were edged higher while the RBA maintained its dovish tone in the afternoon. The Aussie looked poised to make another run at 0.7800 following the GDP partials and the at expectations Chinese PMI figures, however bulls were stopped in their tracks later in the session as the RBA chose to take a wait and see approach rather than signal policy tightening like the BOC and RBNZ. Immediate reaction post RBA was a selloff in the pair, with cross selling dominating the move lower. The AUDUSD touched an intraday low of 0.7734 before recovering in early London with the GBPUSD touching the highest level in three years.
The story in the UK is mixed, with the recovery moving in the right direction following the strong vaccination effort worries emerged that a new COVID19 variant has put it all at risk. GBPUSD retreated off its highs, and down as much as 0.7% on the session. During the North American session it was commodities that saw the biggest movement, with WTI crude up another 1.5% and dragging crude backed currency pairs higher with CAD and NOK up on the day. UST yields are up following the US holiday, with the short end leading the move. Iron Ore continues its recovery after the China driven selloff, up another 2% and taking aim at the US$200/tonne level yet again. Gold took a slight hit, although still over US$1900/oz but down 0.35% from yesterday’s opening prices.
The Day Ahead
> AU Q1 GDP : 1.5% exp.
> EU April German Retail Sales : -2.4% exp.
> AU RBA Dep. Gov. Debelle to speak
> US FOMC Members Bostic and Evans to speak
The data continues again today, with the Q1 growth numbers giving local investors something to chew on at 11:30am AEST. Potential for an upside beat on the 1.5% consensus forecast is definitely there, providing an interesting scenario for the RBA in their upcoming meeting. Markets will get some commentary RBA Ast. Gov. Kent this evening, an evening speaking engagement from the local Central Bank. Commentary from the US Fed will be important as they may start to elude to what will come from the Fed Chair on Friday, although the major risk ahead remains the May jobs report as the US recovery is eyed.
Range for the day : 0.7720 – 0.7780
The pair seems to be faded towards the 0.7800 handle, with selling pressure seen around the figure. No real change to the technical picture, however following the RBA’s policy decision the upside risks seem to be limited on the dovish tone. 0.7813 the key, with a close above 0.7780 needed. While support at the 50/100DMAs ahead of the recent low sub 0.7700.
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