RBA interest rate decision

• On Tuesday, during the Asian session RBA will announce its interest rate decision and is expected to remain on hold at +1.50%.
• Currently, AUD OIS imply a probability for the bank to remain on hold at 99.67%.
• As no interest rate movement is expected the market’s focus could shift to the accompanying statement.
• Considering the unemployment rate rising and reaching 5.6%, despite the banks predictions and the wage price index growth rate remaining at low levels, it could be the case that the bank will issue an accompanying statement with a rather dovish tone.
• Should there be a dovish tone in the accompanying statement we could see the AUD weakening.

Trade wars: Alliances forming?

• Amid fears over a possible trade war, China seems to be reaching out for Europe as it pledges to open further it’s economy.
• Chinese officials recently stated that “China and EU, now have a common stance against unilateralism and upholding the WTO”.
• In other headlines, it seems to be the case that Germany is approaching France in an effort to overhaul EU relationships. Also,   EU commission president Juncker stated that the bashing of Russia must stop.
• Should there be any further positive headlines about the EU we could see the common currency strengthening.

Today’s other economic highlights

• Eurozone: PPI for April, Survey:+0.3% mom Prior:+0.1% mom, 09:00 (GMT), could strengthen EUR
• US: Factory orders for April, Survey:-0.6% mom Prior:+1.6% mom, 14:00 (GMT), Could weaken USD

As for the rest of the week

• On Tuesday, Australia’s Current account balance for Q1 and UK’s services PMI for May
• On Wednesday, we get Australia’s GDP for Q1, the US trade balance for April and Canada’s trade balance for April.
• On Thursday, Australia’s Trade balance for April and Eurozone’s GDP growth rate for Q1 are due out.
• On Friday, Japan’s current account balance for April and GDP growth rate for Q1, China’s Trade balance for May as well as Canada’s employment data for May will be released.
• On Saturday, China’s CPI and PPI rates for May are due out.