AUD - Australian Dollar
The Australian Dollar has made a fresh 2019 low gapping considerably lower as we open for the first day of trade this week. The AUD/USD is currently buying 0.6968 at the time of writing and beginning to feel the pressure surrounding tomorrow’s RBA rate announcement. The odds for an RBA rate cut have increased, markets (based on interbank futures) are now placing close to a 40% chance for the RBA to lower the cash rate in May and have fully priced in a rate cut for July. With most investment banks of the opinion that the weakness in the housing market will force the RBA to move, the RBA’s May decision tomorrow will be a keenly watched one, and the closest decision in a long time.
On the data front, Friday saw the release of the Australian Industry Group performance index which rose by 1.7 points to 46.5 in April vs 44.8 last month indicating a slower rate of contraction across the services sector. The contraction was reported across both the business-orientated sectors and most of the consumer-orientated sectors. The data had no impact on the local unit however, local Building Approvals data dragged the AUD/USD to a low of 0.6984 after an unexpected drop. Australia's Building Permits fell 15.5% month-on-month in March, reversing the 19.1% gain seen in February and a market expectation of a 14% drop. The approvals fell 27.3% in annualized terms, having dropped 12.5% in the preceding month.
Looking ahead, Australia is set to release its monthly Melbourne Institute Inflation Gauge which measures the price of goods and services purchased by consumers, it can be an insight to consumer inflation and is designed to mimic the quarterly government-released CPI data. Also on the calendar at 11:30 AEST ANZ job Ads will be released.
The U.S. dollar index was down on Friday ending a two-week winning streak. The Index fell by 0.34% to 97.25 on the back of soft wage growth data. Nonfarm payrolls rose by 263,000 compared to expectations for a 181,000 gain. Meanwhile the unemployment rate fell to its lowest level in more than 49 years to 3.6%, but average hourly earnings, an important number to gauge inflation, rose 0.2% below expectations for a 0.3% rise.
In the UK, the Pound Sterling soared into the weekend and became the weeks best preforming currency following a poor performance by Labour and the Conservatives in the local elections. Local news outlets believe this may have heightened the incentive to agree a deal in cross-party talks and move the agenda away from Brexit. GBP/USD rose just over 1% and closed the week at 1.3171
Over in Europe, the Euro didn’t pay much attention to better-than-expected April Eurozone CPI data. Rather, it tuned in to broad US Dollar weakness following the jobs report that saw bond yields fall and the S&P 500 rise in risk-on trade. EUR/USD closed the first week of May 1.12008.
0.6920 - 0.7020 ▼AUD/EUR:
0.6180 - 0.6280 ▼AUD/NZD:
1.0470 - 1.0610 ▼GBP/AUD:
1.8650 - 1.9000 ▲AUD/CAD:
0.9310 - 0.9440 ▼