Equity markets in the US and Europe stalled. The S&P500 is down 0.8%, although tech stocks still performed well – the NASDAQ 100 making a fresh record high. Bond yields fell on the eve of the FOMC decision.
The US dollar index is down 0.3% on the day
EUR ranged between 1.1241 to 1.1364
USD/JPY continued its downward trend from 108.10 to 107.62
AUD initially fell to 0.6899 before recovering to 0.6975
NZD also fell to 0.6469 before recovering to 0.6532
AUD/NZD went to 1.0638 before recovering to 1.0695.
A busy day ahead with releases from China and the US expected to dominate market attention. Expectations is that China inflation will ease, leaving more room for the PBoC’s policy easing. US CPI report and the FOMC will be watched closely, there is unlikely to be major policy shifts at this meeting, but the focus will be more on the tone of communications.
The adamant buying in the AUD/USD finally subsided yesterday after concerns from the Chinese education minister pushed the AUD/USD to a low of 0.6899. Further demand is expected around the 0.69c area while offering interest likely intensifies as we approach yesterday’s high of 0.7043.
Event Risk Data Today
New Zealand: Manufacturing activity in Q1 and REINZ housing data for May also released.
Australia: Consumer Sentiment Index rebounded 16.4% in May, following an extreme fall in April. Currently, the index is around GFC lows. April housing finance approvals are also out.
China: May CPI is expected to moderate and PPI is set to slip further into deflationary territory.
US: CPI data to be released. The major event of the day will be the FOMC’s June monetary policy meeting.