Trading Mid-Day Update (05/31)
Trading Mid-Day Update (05/31)
During today’s Currency Call, Gim Hong highlighted that the Reserve Bank of Australia (RBA) monetary policy meeting tomorrow at 1230 (GMT+8) is likely going to be uneventful with the central bank holding interest rate unchanged at 0.10% while letting its quantitative easing (QE) programme run as per normal. This is so because the RBA mentioned previously that QE evaluation will take place during the July meeting. Also, there has not been any big changes to the recent releases of economic data that will catch the central bank’s attention. The decline in jobs during April will not be an issue to the RBA as they have already mentioned previously that this is expected due to the ending of the JobKeeper wage subsidy programme. The central bank may highlight the recent lockdown imposed on Victoria state due to the detection of a new infection cluster as it may have an impact on their decision on whether to carry on with a third round of QE in September when the second-round ends.
Scott highlighted that the U.S. dollar index spiked up last Friday after the announcement made by President Joe Biden on an increase in infrastructure spending although the Democrats and the Republicans are still in a discussion on its finalisation. Note that as the U.S. is observing Memorial Day today, expect lower trading volume and volatility. At the moment, the dollar index is trading at the support level of 90. Wait for the U.S. ISM manufacturing PMI data release tomorrow at 2200 (GMT+8) before looking for trading opportunities.
Jin highlighted that with the recent hawkish tone from the Reserve Bank of New Zealand, attention should be place on whether it will influence the RBA to follow suit. If the RBA does talk about an earlier interest rate hike tomorrow, that may strengthen the Australian dollar.
The Australian GDP q/q data to be released this Wednesday at 0930 (GMT+8) is expected to indicate continued economic growth.
The Australian retail sales m/m data to be released this Thursday at 0930 (GMT+8) may perform better than previous.
During the day, AUD/USD strengthened while NZD/USD was little moved.
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