Daily Update - 3rd June 2020
AUD - RBA Rate Decision RBA left monetary policy unchanged as widely expected. Cash rate is held at 0.25%. The target for 3-year government bond yield is also held at 0.25%. It maintained the pledge that, until progress is made towards full employment and inflation, “the Board will not increase the cash rate target”. Also, 3-year AGS yield target will “remain in place”. On the economy, RBA said the depth of the downturn will be “less than earlier expected”. Rate of new coronavirus infections in Australia has “declined significantly” and some restrictions have been “eased earlier than was previously thought likely”. Also, hours worked could have stabilized in early May while there was pickup in some consumer spending. Though, the “the outlook, including the nature and speed of the expected recovery, remains highly uncertain and the pandemic is likely to have long-lasting effects on the economy. • AUD: Gross Domestic Product • EUR: Unemployment rate • USD: ADP Employment Change • USD: ISM Non-Manufacturing PMI • CAD: Interest Rate Decision Australian GDP: The Q1 GDP reading in-line with the market’s expectations, or even slightly worse, should keep the pair on its bullish track toward the psychological 0.7000 threshold. EUR Unemployment Change: The German locomotive has been sputtering. Germany’s jobless claims soared to 373 thousand in March, crushing the estimate of 75 thousand. Another huge figure is expected in April, with a forecast of 188 thousand. GBP Services PMI: The services sector has been hit hard by the Covid-19 pandemic, and the initial reading in May stood at 27.8 points. The final reading is projected at 27.9 points. BoC Rate Decision: The Bank of Canada has kept rates close to zero, as the economy grapples with the financial crisis. Policymakers are expected to maintain the current rate of 0.25% at the upcoming meeting. ISM Non-Manufacturing PMI: The services sector has held up rather well; the April reading of 41.8 marked the first contraction in 2020. A slightly stronger reading is projected for April, with a forecast of 44.0 points. Risk appetite should be supported by today’s U.S. ADP and non-manufacturing ISM reports. From a logistical perspective, the service sector was able to restart before manufacturing, and while ADP is expected to report more job losses, the pace should ease. This could help the U.S. dollar rally particularly against the euro ahead of the European Central Bank’s monetary policy meeting.Yesterday’s Market
Yesterday’s Explained
Today’s Market
Today’s Focus
