Despite better-than-expected Australian trade numbers for May, AUD was virtually unmoved in the Asian session Thursday. JPY, meanwhile, was under a little pressure as equity markets opened in the red across the region and BOJ reiterated it would pursue powerful easing.
The Australan trade deficit was A$285 mln (A$500 mln expected) with a reduced deficit also reported for the previous month. April’s deficit was revised to a mere A$26 mln from A$203 mln giving additional spice to the numbers. Exports rose 2.2 percent after an upwardly-revised 3.4 percent in April with an ongoing rebound in iron ore and coal shipments and a weaker AUD both helping. But volatile fuel prices led to imports gaining by a larger 3.2 percent following a revised 0.4 percent decline the previous month. The numbers were generally seen as positive, despite the ongoing deficit, reflecting continued demand for the country’s resources and the positive impact of the AUD’s recent decline. No doubt the RBA will be “pleased” that its relaxed stance on the local economy is borne out by the recent data.
Risk appetite had to take its cue from European action and, with equity markets across the region opening in the red and trading with a softer bias, it was inevitable that we saw some cross-JPY selling midway through the morning. There were no data releases or headlines to drive the move, just sentiment.
The JPY move came after BOJ’s Shirakawa reiterated that the BOJ would pursue powerful monetary easing and do all in its power to ensure the stability of Japan’s financial system. Despite the current calm, he warned that global markets remained jittery on the EU debt problems. In contrast to the slowdown seen elsewhere in the global economy, the Japanese economy appears to be picking up moderately, he added. The next BOJ meeting is July 11-12.
The US Independence day holiday ensured a lackluster overnight session though the EUR did suffer a late sell-off. An unchanged verdict from Sweden’s Riksbank saw EURSEK hit its lowest level since 2000 as the EUR was weakening. On the data front, UK services PMI was weak (51.3 from 53.3 with 52.9 expected) which has led some to suggest a negative print for Q2 GDP and heightened talk of a larger £75 bln QE announcement from the Bank of England at today’s meeting.
Data Highlights
UK Jun. PMI Services out at 51.3 vs. 52.9 expected and 53.3 prior
EU May Euro-zone Retail Sales out at +0.6% m/m, -1.7% y/y vs. flat/-1.0% expected and revised -1.4%/-3.4% prior resp.
AU May Trade Balance out at –A$285 mln vs. –A$500 mln expected and revised –A$26 mln prior
Upcoming Economic Calendar Highlights
(All Times GMT)
UK Halifax House Prices (0700)
Sweden Service Production (0730)
GE Factory Orders (1000)
UK BOE Rate Announcement (1100)
US Challenger Job Cuts (1130)
EU ECB Rate Announcement (1145)
US RBC Consumer Outlook Index (1200)
US ADP Employment Change (1215)
EU ECB Press Conference (1230)
US Initial Jobless Claims (1230)
US Bloomberg Consumer Comfort Index (1345)
US ISM Non-manufacturing (1400)
Andrew Robinson,
SAXO BANK