Talking Points:
- Australian Dollar soared after RBA signals shift back to neutral policy stance
- British Pound briefly spiked higher vs. majors after alleged “fat finger” error
- Upside revision on Eurozone 1Q GDP may boost risk appetite, commodity FX
The Australian Dollar soared against its major counterparts after the RBA appeared to settle back into wait-and-see mode following last month’s surprise interest rate cut. The central bank kept its baseline cash rate unchanged as expected at 1.75 percent following today’s policy meeting but the accompanying statement seemed to strike a less dovish tone than previously.
In the document, Governor Glenn Stevens argued that the existing policy stance is “consistent with sustainable growth in the economy and inflation returning to target over time,” pouring cold water on speculation about a sustained easing cycle. The Aussie rose alongside front-end bond yields, underscoring the anti-dovish perception of the RBA’s updated stance.
The British Pound mysteriously surged against all of its major counterparts. A clear-cut trigger was not readily apparent, with the newswires citing a so-called “fat finger” error on one of the major electronic platforms as the culprit. The erroneous quote allegedly triggered stop-lossesintraday, fueling a spike. Needless to say, it is nearly impossible to confirm the accuracy of such theories.
Looking ahead, a relatively quiet economic calendar in European and US trading hours is headlined by a revised set of first-quarter Eurozone GDP figures. News-flow out of the single-currency area has increasingly improved relative to consensus forecasts over the past three months, opening the door for an upside adjustment. Such a result may push back against global slowdown fears and boost risk appetite, offering a lift to commodity-bloc FX while punishing the anti-risk Japanese Yen.
Asia Session
| GMT | CCY | EVENT | ACT | EXP | PREV |
|---|---|---|---|---|---|
| 22:00 | NZD | ANZ Truckometer Heavy (MoM) (MAY) | -1.7% | - | -2.4% |
| 23:01 | GBP | BRC Sales Like-For-Like (YoY) (MAY) | 0.5% | 0.3% | -0.9% |
| 23:30 | AUD | AiG Perf of Construction Index (MAY) | 46.7 | - | 50.8 |
| 23:30 | AUD | Weekly Consumer Confidence Index (JUN 5) | 116.8 | - | 113.2 |
| 23:50 | JPY | Official Reserve Assets (MAY) | $1254.0b | - | $1262.5b |
| 04:30 | AUD | RBA Cash Rate Target (JUN 7) | 1.75% | 1.75% | 1.75% |
| 05:00 | JPY | Leading Index CI (APR P) | 100.5 | 100.7 | 99.3 |
| 05:00 | JPY | Coincident Index (APR P) | 112.2 | 112.7 | 111.1 |
European Session
| GMT | CCY | EVENT | EXP | PREV | IMPACT |
|---|---|---|---|---|---|
| 06:00 | EUR | German Industrial Production (MoM) (APR) | 0.7% | -1.3% | Medium |
| 06:00 | EUR | German Industrial Production (YoY) (APR) | 1.0% | 0.3% | Medium |
| 06:30 | AUD | Foreign Reserves (A$) (MAY) | - | 65.7b | Low |
| 07:00 | CHF | Foreign Currency Reserves (MAY) | - | 587.6b | Low |
| 07:30 | GBP | Halifax House Prices (MoM) (MAY) | 0.3% | -0.8% | Medium |
| 07:30 | GBP | Halifax House Price (3Mths/Year) (MAY) | 8.9% | 9.2% | Medium |
| 09:00 | EUR | Eurozone GDP SA (QoQ) (1Q F) | 0.5% | 0.5% | High |
| 09:00 | EUR | Eurozone GDP SA (YoY) (1Q F) | 1.5% | 1.5% | High |
| 09:00 | EUR | Eurozone Gross Fix Cap (QoQ) (1Q) | 1.1% | 1.3% | Low |
| 09:00 | EUR | Eurozone Gov’t Expenditure (QoQ) (1Q) | 0.4% | 0.6% | Low |
| 09:00 | EUR | Eurozone Household Consumption (QoQ) (1Q) | 0.5% | 0.2% | Low |
| 11:00 | EUR | ECB's Makuch Speaks on Economic Forecast | - | - | Low |
Critical Levels
| CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
|---|---|---|---|---|---|---|---|
| EUR/USD | 1.1224 | 1.1291 | 1.1323 | 1.1358 | 1.1390 | 1.1425 | 1.1492 |
| GBP/USD | 1.4089 | 1.4265 | 1.4354 | 1.4441 | 1.4530 | 1.4617 | 1.4793 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To receive Ilya's analysis directly via email, please SIGN UP HERE
Contact and follow Ilya on Twitter: @IlyaSpivak
