Global Markets:

  • Asian stock markets: Nikkei up 1.30 %, Shanghai Composite gained 1.80 %, ASX rose 1.10 %, Hang Seng closed

  • Commodities: Gold at $1213 (-0.50 %), Silver at $16.88 (-1.30 %), WTI Oil at $51.68 (-0.90 %), Brent Oil at $57.45 (-0.75 %)

  • Rates: US 10 year yield at 1.895, UK 10 year yield at 1.588, German 10 year yield at 0.195

News & Data:

  • RBA leaves the cash rate unchanged at 2.25 per cent

  • RBA: Moderate growth in global econ expected in 2015

  • RBA: Much lower levels of energy will act to strengthen global output and temporarily lower CPI rates

  • RBA: Prices for key Australian exports have been falling, terms of trade continuing to decline

  • RBA: Data suggests growth is continuing at below-trend pace, domestic demand growth weak as business capex falls

  • RBA: Economy likely to be operating with degree of spare capacity for some time yet

  • RBA: Inflation likely to remain consistent with target over next one to two years

  • RBA: Australian Dollar has declined noticeably against USD, though less against a basket of currencies

  • RBA: Further AUD depreciation likely, particularly given the significant declines in commodity prices

  • RBA: Lower exchange rate needed to achieve balanced growth in economy

  • RBA: Further easing of policy may be appropriate over period ahead, in order to foster sustainable growth in demand and inflation consistent with target

  • Australia Retail Sales 0.7 %, Expected: 0.4 %, Previous: 0.5 %

  • Fed’s Lockhart Favours July Or Sept. Rate Lift-off Instead Of June — BBG

  • Lockhart: March Jobs Report Is Consistent With Weak Q1 Data; Ups And Downs Not A Surprise In Jobs Data

  • Lockhart: Not Ready Yet To Conclude A Slowdown Is Underway

Markets Update:

The main event overnight was the RBA rate decision. The market was expecting a 25 bps rate cut, but the bank kept the main rate unchanged at 2.25 %. While they made clear that there could be a rate cut in the near future if necessary, the statement was not overly dovish. The Australian Dollar has been under a lot of pressure in the past two weeks amid RBA expectations and we are likely to see further short covering in the next few sessions. AUD/USD is approaching the 0.77 level at the time of writing, and the next significant resistance level is seen at 0.7740. If bulls are able to take that level out, there is not much in the way for a 0.7880/0.79 test. AUD/NZD is rallying as well, after almost reaching the big 1.00 level yesterday. The pair is now almost at 1.02 and a move back towards 1.03 seems likely.

Price action in the other major currency pairs was rather quiet. EUR/USD traded in a 1.0917-54 range, while GBP/USD consolidated between 1.4870 and 1.4910. The post-NFP rally has been almost retraced. The key levels to watch in EUR/USD are 1.0905 (minor support) and 1.0860 (medium support, Friday's low) and 1.4872 (yesterday's low) 1.4810 (Friday's low) in GBP/USD.

Upcoming Events:

  • 08:15 BST – Spanish Services PMI (56.5)

  • 08:45 BST – Italian Services PMI (51.1)

  • 08:50 BST – French Services PMI (52.8)

  • 08:55 BST – German Services PMI (55.3)

  • 09:00 BST – Euro Zone Services PMI (54.3)

  • 09:30 BST – UK Services PMI (57.0)

  • 09:30 BST – Euro Zone Sentix Investor Confidence (20.0)

  • 10:00 BST – Euro Zone PPI (0.1 % m/m, -3.0 % y/y)

  • 13:50 BST – FOMC Member Kocherlakota speaks

  • 15:00 BST – US JOLTs Job Openings (5.01mln)