FXStreet (Mumbai) – Poor retail sales and trade balance numbers on the Aus data space today signaled further need for policy loosening which dragged the Australian dollar lower across the board. While the Kiwi remains pressured on RBNZ new measures for curbing inflation. On the contrary, USD/JPY emerged the top gainer across the FX board, extending gains with 125 on sight.
Key headlines in Asia
Greek PM Tsipras: Agreement very close
Australian Retails Sales disappoint at just 0.0%
Australia’s merchandise trade deficit tripled in April
Japan Foreign investment in Japan stocks: ¥574.2B (May 29) vs ¥561.2B
Dominating themes in Asia – centered on JPY, AUD, NZD
With no data from Japan, the main events in focus were Australia’s trade balance and retail sales figures, both coming in worse-than expectations. The entire Antipodean complex maintained an offer tone today mainly on discouraging Aus macro data which backs the case for further easing bias.
The gap in trade broadened to a record $3.89 billion in April from a revised $1.23 billion in March, expanding more than the $2.1 billion deficit forecast. While retail sales showed no change in April after rising a revised 0.2% in March, falling far short of the forecast of 0.4% growth.
The dollar-yen pair outperformed in the Asian session, extending beyond 124 handle, as the USD bulls continued to cheer the upbeat ADP jobs and trade data from the US released yesterday which added to the recent increased bets of Fed rate hike as early as Sept this year, completely ignoring dismal US ISM non-manufacturing PMI report.
Heading into Europe – centered on EUR, GBP
A data-dry European session, with the Bank of England’s (BOE) monetary policy meeting the only highlight in today’s EUR calendar. While 2-tier data in Euro zone retail sales PMI is the sole data to be published at 7.10GMT.
BOE policymakers will most likely leave the monetary policy unchanged today at its rate decision, as inflation remains significantly weak and is expected to remain close to zero before rising again toward the end of this year.
Despite the current unanimity, the latest MPC minutes revealed the rift among policymakers continued in May, with McCafferty and Weale seeing their May decision as “finely balanced between voting to hold or raise the Bank Rate.”
Kathy Lien from BK Asset Management believes, “When the BoE leaves policy steady, there tends to be very little reaction in the British pound because there is no accompanying press conference to explain their decision. However even if they held one, their views would be very mixed because the increase in the manufacturing and construction sector PMI indices released earlier this week was offset by today’s decline in the PMI services and composite index. The steep decline in service sector activity, which represents the largest part of the economy, fell by the sharpest amount in 4 years. So the case for a rate hike has weakened and when the minutes are released from tomorrow’s meeting 2 weeks later, they will most likely show a cautious central bank that intends to keep policy unchanged for the rest of the year.”
Later in the North American session, we have weekly unemployment claims and revised nonfarm productivity q/q data from the US. While markets eagerly await the most influential data for this week, US non-farm payrolls due to be released on Friday.
(Market News Provided by FXstreet)