RBA meeting looms

May 7, 2019

A busy Tuesday coming up with a stack of data being published, while markets recover from the tariff bombshell that was dropped yesterday.

The EURUSD made some modest gains overnight after opening much lower than Friday’s close. The pair opened at $1.11665 and dipped to an opening-hour low of $1.11649 before climbing for most of the session. Late trading saw the euro peak at $1.12804 before coming back slightly to its present level of $1.12007. The GBPUSD weakened overnight, giving up a chunk of the gains it made during Friday’s rally. The pair began the week at $1.31449 and ticked up to an early high of $1.31700 before falling throughout the majority of the day. The pound fell to a low of $1.30793 late in the day and remained near those levels for the rest of the session. It is currently trading at $1.30948.

The Dow was pilloried yesterday after opening the session at 26,322.98 (almost 200 points lower than Friday’s close). The index had a rough start to the week after Trump’s trade bomb was deployed before the open, falling to lows of 25,970.77. It traded near those lows over the next few hours before showing some signs of life, rallying to a high of 26,487.34. It fell very late in the session and is currently trading at 26,286.14. The Dax suffered at the hands of tariff talk, opening the week at 12,241.00 (200 points lower than Friday’s close). The German index declined early, falling to lows of 12,135.47. The Dax surged off those lows, hitting a final-hour high of 12,343.72 before closing at 12,333.17.

The day ahead shapes up to be an interesting one as attention turns to Australia. The central bank will be meeting to discuss interest rates. There is now a growing portion of analysts calling for an interest rate cut, given the anaemic inflation within the Australian economy. With a federal election coming up, this may help convince the RBA to keep interest rates on hold, such is their reluctance to appear political. They may also see enough strength in the economy to keep rates on hold anyway.

Other data released today includes:

Canada – Ivey PMI

NZ – Inflation Expectations, GDT Price Index

UK – Halifax HPI, MPC Member Jon Cunliffe speaks

Australia – Retail Sales, Trade Balance, RBA Rate Statement

Europe – German Factory Orders, French Trade Balance, Swiss Foreign Currency Reserves, EU Economic Forecasts

US – JOLTS Job Openings, IBD/TIPP Economic Optimism, Consumer Credit, FOMC Member Randal Quarles speaks


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