Earlier in the Day:
It was another quiet start to the day on the economic calendar this morning. The Aussie Dollar was in action this morning.
For the Aussie Dollar
House price figures and the RBA meeting minutes were in focus this morning.
In the 1st quarter, house prices increased by 5.4% year-on-year, coming up short of a forecasted 5.5% rise. House prices had been up by 3.0% in the 4th quarter of last year.
Salient points from the RBA meeting minutes included:
- Inflation and wage pressures remained subdued, despite the strong recovery in the economy and employment.
- Borrowing rates for households and businesses on outstanding loans had continued to drift lower and were also at historical lows.
- The Bank’s policy package had contributed to a lower exchange rate than would otherwise have been the case.
- Monetary policy would likely need to remain highly accommodative for some time yet.
- Government bond purchases discussed and the Board would decide upon future purchases at the July meet that comes ahead of the completion of the second $100 billion of purchases in early September.
- Options include:
- Ceasing purchasing bonds in September.
- Repeating $100 billion of purchases for another 6-months.
- Scaling back the amount purchased or spread the purchases over a longer period of time.
- Move to a more frequent review of bond purchases, based on the flow of data and the economic outlook.
- The Board would not increase the cash rate until actual inflation is sustainably within the 2-3% target range. For this to occur, wages growth would need to be materially higher than it currently is.
- This would require significant gains in employment and a sustained return to a tight labor market.
- Members view these conditions unlikely until 2024 at the earliest.
The Aussie Dollar moved from $0.77111 to $0.77027 upon release of the figures and the minutes. At the time of writing, the Aussie Dollar was down by 0.13% to $0.7702.
The Day Ahead
For the EUR
It’s a busy day ahead on the economic data front. Finalized inflation figures for Germany, France, and Italy are due out along with trade data for the Eurozone.
Barring marked revisions from prelims, however, we would expect the trade data for April to have greater influence.
At the time of writing, the EUR was down by 0.02% to $1.2117.
For the Pound
It’s a busy day ahead on the economic calendar.
Employment figures are due out later this morning. Expect April’s unemployment rate and May’s claimant count to have the greatest impact on the Pound.
Away from the economic calendar, greater certainty over the timing of the UK’s full reopening is going to be needed to support the Pound.
At the time of writing, the Pound was down by 0.07% to $1.4102.
Across the Pond
It’s a busy day ahead on the economic calendar. Key stats include retail sales, wholesale inflation, and industrial production figures.
Following the marked pickup in inflationary pressures, expect the retail sales figures to be key.
Other stats due out include inventory figures for April and the NY Empire State Manufacturing Index numbers for June. Barring particularly dire numbers, however, these should have limited impact on the Dollar and broader market risk sentiment.
At the time of writing, the Dollar Spot Index was flat at to 90.520.
For the Loonie
It’s a quiet day ahead on the economic data front. Housing sector data is due out later today.
We don’t expect the numbers to have much influence on the Loonie, however, leaving the Loonie in the hands of market risk sentiment.
At the time of writing, the Loonie was down by 0.02% to C$1.2147 against the U.S Dollar.
For a look at all of today’s economic events, check out our economic calendar.