G7 Call, BoC Due
The euro pushed lower again overnight in a fairly quiet session. Data prints were on the soft side, German PMI slipped to 51.8, and Eurozone retail sales fell 1.0% m/m. German factory orders also dell 1.9% m/m. The G7 emergency call is due to take place at 11.30 GMT but there has been no word on whether a statement will be released. Reuters, citing Spain’s Treasury Minister, said that neither France nor Germany had asked the country to seek an international bailout. Earlier, in line with expectations, the RBA cut the cash rate by 25bps overnight. The central bank noted weakness in Europe and China as the principal drivers but did point towards some domestic indicators such as the labour market stabilizing. The Q1 c/a deficit came in at AUD 14.9bn, as expected with net exports taking 0.5% off GDP. AUD traded in a volatile fashion – dropping to 0.9715 before quickly rebounding back to 0.9790, as risk assets rallied in general. Stocks in Asia rose for the first time in 5 days, the RBA decision will fuel hopes that a bout of stimulus will be forthcoming from other central banks. Today’s rate RBA rate cut is unlikely to be matched by the BoC, who remain one of the least dovish central banks in the G10 space. Developments in overseas markets are likely to lead to a somewhat cautious tone from Governor Carney however.
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