FXStreet (Mumbai) – The Aussie witnessed sharp drop and slumped to near six-year lows after the Reserve Bank of Australia’s (RBA) kept the policy steady, although maintained that there is further scope for further easing. The Kiwi also followed suit and remained in red largely discouraged by New Zealand NZIER Business Opinion Survey for Q2. While the US dollar remained broadly stronger, keeping USD/JPY lifted near 122.70 levels.
Key headlines in Asia
RBA interest rate firm at 2%, no explicit bias
NZ NZIER Q2 survey softens: further rate cuts anticipated
Germany’s Oettinger: Greece likely to issue IOUs, pave way to Grexit
Dominating themes in Asia – centered on JPY, AUD, NZD
Markets moved past Greek issues and looked forward to the key event – RBA rate decision in Asia. As widely expected, the central bank made no changes to its monetary policy settings keeping the interest rate at 2%. However, RBA noted that given the global uncertainties and moderate growth in Australia, there is need for accommodative policy, while talking down the exchange rate.
The Aussie fell further into losses post RBA decision, making lows of 0.7465 – near 6-yr trough. While the Kiwi also remained undermined after the latest NZIER Quarterly Survey of Business Opinion shows the New Zealand economy losing momentum. The sluggish survey released suggested the need for further policy easing this year in a bid to spur the NZ economic growth.
While the dollar-yen pair kept green in the Asian session as the US dollar regained lost footing and edged slightly higher this session versus the yen as the greenback received support from improving non-manufacturing sector activity as per the ISM data released in the US session. also, weakening EUR/USD on the back of Grexit fears continues to boost the upside in the greenback.
Among the Asian indices, the Nikkei 225 in Tokyo rebounds today, rising -1.34% to trade at 20381, while Australian benchmark the ASX 200 rallies 1.58% and trades at 5561. On the contrary, South Korea’s Kospi is losing -1% and trades at 2034 While, China stocks snapped previous gains and resumed its bearish tone, with Shanghai -3.19% lower at 3655.65.
Heading into Europe – centered on EUR, GBP
We have a busy European calendar with industrial output numbers from both Germany and the UK will be reported in the European session.
Germany will report the results of industrial production in May, with 0.1% growth seen m/m, compared to a 0.9% gain registered in April, and a 2.6% advance y/y, after 1.4% growth seen a month ago.
UK industrial production results in May are seen as declining 0.2% on a monthly basis after the 0.4% gain reported in April, and adding 1.6% on an annual basis compared to the 1.2% growth reported a month ago.
While, ECB Governing Council member and Bank of France Governor Christian Noyer will speak at the Paris Europlace conference.
However, the main event for the day will remain the Euro group meetings alongside the Euro Summit, with European ministers struggling to bring a resolution to the Greek bailout drama, especially after Greek voted NO to the austerity measures offers by its creditors at Sunday’s Greek Referendum.
Looking ahead, the North American session offers crucial trades figures from Canada as well as the US while US JOLTS job openings will also be published later today.
EUR/USD Outlook
Valeria Bednarik, Chief Analyst at FXStreet explians that 1.1000 poses as a key support levels for the EUR/USD pair, “The short term picture favors the downside, as the price was unable to advance beyond its 100 SMA in the hourly chart, where indicators are now turning lower in neutral territory. In the 4 hours chart, the price remained capped by a bearish 20 SMA, whilst the technical indicators present tepid bearish slopes below their mid-lines, all of which supports additional declines for the upcoming sessions.”
(Market News Provided by FXstreet)