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RBA to wait for more information, eyes on AU CPI today and business sentiment surveys

Currencies
RBA to wait for more information, eyes on AU CPI today and business sentiment surveys

By Kymberly Martin

Currency markets can be somewhat characterised as rattling around in ranges so far this week, traders cautious and wanting to keep their powder dry for events later this week.

The NZ$ this morning remains in good heart on most cross rates, without as yet breaking to any fresh ground.

The German ZEW survey was the only noteworthy data release last night and while the reading on the current conditions exploded to 70.2 from 55.1 in March, if things are so good why did the forward-looking expectations index slide to 53.3 from 54.8? Perhaps this is telling us, this is as good as it gets.

The usual financial media reports that the ECB is studying curbs on Greek bank support via the ELA amid growing opposition to use of the facility to prop up the Greece financial sector and in an effort to protect its own balance sheet as the Greek debacle worsens.

This comes on the heels of yesterdays’ news that the Greek CB issued a decree instructing local government entities to deposit their cash balances at the CB, every last piggy bank is being turned upside down and shaken in a desperate scramble to find milk money.

Not surprisingly Greek yields continue to soar, ironically on a day when the Euribor 3M fixing dropped below zero for the first time, effectively meaning banks can get paid to look after each other’s cash.

Yesterday the RBA Minutes (April) confirmed the Board considered easing again but preferred to wait for more information.

The Minutes mirrored remarks made by Governor Stevens on Monday that while the RBA has a willingness to ease again if it is required, they feel the cash rate has been at “an extraordinarily low level” for an extended period and they are seeking to “strike a balance”.

So today’s release of Australian Q1 CPI will be closely watched to establish whether the economy is still on its sub-trend forecast path.

The consensus looks for +0.6% and +0.5% for respective trimmed and weighted mean measures, while annual headline CPI is seen at +1.3% and the m/m at +0.1%. Our forecasts are for a slightly below consensus zero m/m rate and +0.3%/0.4% underlying rate.

Elsewhere the day ahead serves up monthly Japanese trade data, secondary data releases from Australia and China before tonight is about light fare from the US.

Locally it looks to be a quieter day on the home front, though obviously there will be attention on the Australian data with the NZDAUD this morning within a striking range of parity once again.

Australian data from last week, the initially reading of labour data and Business Surveys swept under the rug by currency traders who have reverted to type in their bias for holding NZ$ longs on cross rates.

The favour continues while traders and investors observe an RBNZ (and central government) yet to meaningfully address ever tightening monetary conditions against a backdrop of mixed, contrasting messages to observe from sectors of the local economy.

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Source: CoinDesk

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