A$ Outperforms, RBA Today – Close Call

The US services ISM/PMIs were lower than expected which drove a 0.4% drop in the USD index. AUDUSD rose to an intraday high of 0.6637 following the data and is currently trading around 0.6619. Aussie outperformed most of the G10 apart from the safe haven currencies.

• AUDUSD extended its recovery but the trend outlook remains bearish. The bear trigger is 0.6458, the May 31 low. Initial resistance is 0.6638, the June 2 high.
• Aussie moved the most against GBP with AUDGBP up 0.3% to 0.5323. AUDJPY fell 0.1% to 92.36 and AUDNZD rose 0.1% and is now around 1.09. AUDEUR is also 0.1% higher at 0.6178.
• Equity markets were softer after Friday’s rally with the S&P down 0.2% and the Eurostoxx -0.7%. Oil gave up almost all its post-Saudi output cut gains for WTI to finish only 0.2% higher at $72.15. Copper rose 0.9% and iron ore is higher at around $108/t.
• Today the RBA meets and again the decision looks like a close call with economists split and the OIS market pricing in around a 50% chance of a hike. We expect that the more moderate data will allow them to watch & wait this meeting but that hiking isn’t over. See MNI RBA Preview here. There is also Q1 balance of payments data today.