17 Jun 2014
RBA minutes eyed - Westpac
FXStreet (Bali) - Robert Rennie, FX Strategist at Westpac, walks us through the main events for this Tuesday, a day in which the RBA minutes, the UK CPI and German June ZEW economic sentiment, should create some volatility.
Key Quotes
The Asian session will be dominated by the RBA minutes to be released at 11:30am Syd. This is an opportunity for the RBA to differentiate the Australian case. The case is simple. Iron ore has fallen 15% since the May meeting while the currency has appreciated circa 1.5%. Iron ore is at 20 month lows while the A$ TWI is at 10 month highs. This is the perfect opportunity for the RBA, if it decides to take it, to remind markets that a 'further decline' in commodity prices is a consideration for monetary policy given the "exchange rate remains high by historical standards". Whether it is "uncomfortably" high remains to be seen.
Also in Australia at 11:30am, May new vehicle sales, Westpac forecast at 1%. Last month’s print was flat, with Easter timing dampening April sales, and underlying trends subdued. May non-oil domestic exports for Singapore are out at 10:30am Syd/8:30am local. Last month this printed at 0.9% y/y. Given recent trends in world/regional trade data, we are due a bounce.
Major data for US and Europe out later today. UK is set to release May CPI, May PPI and April house prices, with a slight increase in PPI, and slight decrease in CPI forecast due to the reversal of the late Easter boost to the travel component. We will also see US data on May housing starts and permits, both forecast to drop. US May CPI is forecast to tick lower, given the Easter effect on airline fares.
Markets should remain subdued through our session ahead of the FOMC meeting tomorrow. German June ZEW economic sentiment also out tonight which should be helped by the recent ECB actions.
Key Quotes
The Asian session will be dominated by the RBA minutes to be released at 11:30am Syd. This is an opportunity for the RBA to differentiate the Australian case. The case is simple. Iron ore has fallen 15% since the May meeting while the currency has appreciated circa 1.5%. Iron ore is at 20 month lows while the A$ TWI is at 10 month highs. This is the perfect opportunity for the RBA, if it decides to take it, to remind markets that a 'further decline' in commodity prices is a consideration for monetary policy given the "exchange rate remains high by historical standards". Whether it is "uncomfortably" high remains to be seen.
Also in Australia at 11:30am, May new vehicle sales, Westpac forecast at 1%. Last month’s print was flat, with Easter timing dampening April sales, and underlying trends subdued. May non-oil domestic exports for Singapore are out at 10:30am Syd/8:30am local. Last month this printed at 0.9% y/y. Given recent trends in world/regional trade data, we are due a bounce.
Major data for US and Europe out later today. UK is set to release May CPI, May PPI and April house prices, with a slight increase in PPI, and slight decrease in CPI forecast due to the reversal of the late Easter boost to the travel component. We will also see US data on May housing starts and permits, both forecast to drop. US May CPI is forecast to tick lower, given the Easter effect on airline fares.
Markets should remain subdued through our session ahead of the FOMC meeting tomorrow. German June ZEW economic sentiment also out tonight which should be helped by the recent ECB actions.