Currencies to Look Past BOE Rate Decision as Greece Crisis Looms Large

2015-06-04 06:44:00

Talking Points:

FX Markets to Look Past BOE Rate Decision, Focus on Greece News-Flow
Australian Dollar Down After Soft Data Revives RBA Interest Rate Cut Bets
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A monetary policy announcement from the Bank of England headlines the economic calendar in European trading hours but seems unlikely to generate a significant from the British Pound. The central bank’s latest quarterly Inflation Report hinted no rate cuts would materialize until mid-2016. Policymakers don’t release an explanatory statement absent a change in policy, meaning today’s outing will probably prove to be a non-event.

Meanwhile, negotiations between Greece and its creditors are expected to continue, with markets clued to the headlines for a progress report. Agreement on a set of proposals concocted at a top-level meeting in Berlin earlier in the week proved elusive yesterday but debate is set to continue. Traders have been sanguine on the process thus far, with Greek bond yields falling and the Euro rallying in the past two days.

The Australian Dollar faced selling pressure in overnight trade, falling as much as 0.8 percent on average against its top counterparts, after a disappointing set of economic data rekindled RBA interest rate cut speculation. Indeed, the Aussie’s descent tracked a parallel pullback in front-end bond yields.

The trade balance deficit ballooned to -A$3.9 billion, disappointing bets on a –A$2.1 billion result and delivering the largest monthly shortfall on record (since at least 1971). Meanwhile, retail sales growth unexpectedly stalled over the same period, yielding the worst performance in 11 months.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Value of All Buildings SA (QoQ) (1Q)	1.0%	1.0%	-2.1%
01:30	AUD	Trade Balance (A$) (APR)	-3888M	-2100M	-1231M
01:30	AUD	Retail Sales (MoM) (APR)	0.0%	0.3%	0.2%

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
07:30	EUR	Markit Germany Construction PMI (MAY)	-	51.0	Low
08:00	GBP	New Car Registrations (YoY) (MAY)	-	5.1%	Low
08:10	EUR	Markit Germany Retail PMI (MAY)	-	52.6	Medium
08:10	EUR	Markit Eurozone Retail PMI (MAY)	-	49.5	Medium
08:10	EUR	Markit France Retail PMI (MAY)	-	46.2	Low
08:10	EUR	Markit Italy Retail PMI (MAY)	-	49.0	Low
11:00	GBP	BOE Asset Purchase Target (JUN)	£375B	£375B	High
11:00	GBP	Bank of England Bank Rate (JUN 4)	0.50%	0.50%	High