RBA stays on hold

• As was widely expected RBA stayed on hold at +1.50%.
• The accompanying statement had some dovish tones as it expects inflation to remain low for some time while wage growth remains low and is likely to continue for a while yet.
• Other points which are worth mentioning is that household consumption remains a source of uncertainty and that there are concerns about the direction of international trade policy in the US.
• AUD/USD treated the decision as a non event as the market had positioned itself ahead of the release of the decision.
• Should the financial releases, support a more hawkish stance on behalf of the RBA, we could see the Aussie strengthening.

UK’s Brexit border plan

• Media reports stated that the UK seeks a breakthrough in the Brexit negotiations deadlock this week.
• The breakthrough is to be achieved by a UK plan to keep the UK in the EU customs union regime for a longer period of time.
• However the Irish border issue evolves into a greater deadlock and EU’s chief negotiator Barnier stressed that failure to reach an acceptable solution to the problem could increase risks at the final stage.
• Both sides seem to aim October as the final deadline to get a deal on the overall Brexit deal.
• Should there be any further negative headlines about Brexit we could see the pound weakening.

Today’s other economic highlights

• Eurozone: Services PMI for May, Survey:53.9 Prior:53.9, 08:00 (GMT), could weaken EUR
• Eurozone: Composite PMI for May, Survey:54.1 Prior:54.1, 08:00 (GMT), could weaken EUR
• Eurozone: Retail Sales for April, Survey:+0.5% mom Prior:+0.1% mom, 09:00 (GMT), could strengthen EUR
• UK: Services PMI for May, Survey:53.0 Prior:52.8, 08:30 (GMT), could strengthen GBP
• US: ISM Non-Manufacturing PMI for May, Survey: 57.5 Prior: 56.8, 14:00 (GMT), Could strengthen USD
• US: API weekly crude oil inventories, Survey: N/A Prior:+1.001m, 20:30 (GMT), Any reading > 1.001m could weaken oil prices

IronFX Daily Report ‘June 5th’