Global Markets: 

  • RBA Minutes: exchange rate presents a significant source of uncertainty, and accomodative policy is likely appropriate for sometime
  • RBA Mins: Members see GDP growth of 2.75% DEC’14; 2.25%-3.25% June 15′, Cuts June 2014 inflation forecast to 2.75% from 3%
  • RBA Mins: History suggests AUD could drop with terms of trade. FX rate presents significant source of uncertainty
  • Chinese PPI (y/y): -2.0%, Expected: -1.8%, Previous: -2.3%
  • Chinese CPI (m/m): -0.3%, Expected: -0.1%, Previous: -0.5%
  • Chinese CPI (y/y): 1.8 %, Expected: 2.0 %, Previous: 2.4 %
  • Asian stock markets are mixed as of 04:00 GMT; the Nikkei gained 0.40 % while the Shanghai Composite declined 0.30 %
  • Australia’s ASX lost 0.20 % and the Hang Seng is down 0.10 %
  • Gold at $1290 (+0.20 %), Silver at $19.17 (+0.20 %), Crude Oil at $100.44 (+0.15 %)
  • US 10 year yield stands at 2.61 

FX Flows/Orders: 

  • AUD – There are rumors of a 0.94 barrier option in the market, though it wasn’t too long ago since we traded at that level. Anyway, selling ahead of the big figure was decent and while cross flows were AUD-positive, broad USD strength pushed the pair lower. AUD/NZD is likely to test the 1.09 level soon; buying interest will be good towards 1.0780/90.
  • CAD – The CAD short squeeze continues with USD/CAD about to test the 1.08 level. There is talk of barrier options at 1.08 and 1.0750, which might slow the decline, but risk is to the downside. Resistance at 1.0845 (21HMA) and then 1.0873 (55HMA).
  • EUR – EUR/USD rallied at the beginning of the Draghi press conference, almost reaching the 1.40 level, as the statement sounded very familiar to the one in April. However, Draghi then stated that the ECB governing council is comfortable with acting at the next meeting. This was the line all the EUR bears were waiting for and EUR/USD declined to a low of 1.3860 and eventually 1.3830 towards the end of the day. Leveraged names were the main sellers; CTAs were caught long and had to cover.
  • GBP – Leveraged names book profits on long positions as we failed to break above 1.70 and the pair slowly declined throughout the day. Bids mentioned ahead of 1.69, while key short-term tech support located at 1.6850/55.
  • JPY – Little to report in USD/JPY; again reports of bids from 101.40 down to 101.20 with sizeable stops in the mix. Topside, good offers ahead of 102.00.

Upcoming Events: 

  • 06:00 GMT – German Trade Balance (16.6B)
  • 08:30 GMT – UK Industrial Production (-0.2 % MoM, 2.4 % YoY)
  • 08:30 GMT – UK Manufacturing Production (0.3 % MoM, 2.9 % YoY)
  • 08:30 GMT – UK Trade Balance (-9.00B)
  • 12:30 GMT – Canadian Employment Change (11k)
  • 12:30 GMT – Canadian Unemployment Rate (7.0 %)