RBC Capital Markets

USD has drifted lower overnight as equity futures reverse the small losses in the cash market yesterday (S&P future +0.3%). Moves have been small, however and DXY is around the bottom of the range defined by the lows after the weak April payrolls report and the highs after the April CPI. Japan’s Q1 GDP was softer than expected and the RBA minutes did not add much to what we learned from the SOMP (see JPY and AUD). Dallas Fed President Kaplan said it would be healthy to discuss the unintended consequences of QE sooner rather than later, but St Louis President Bullard said it was too early to talk about tapering.

Day ahead: The US calendar is light today, as it remains for most of the week. March labour market data in the UK and the Q1 wage price index in Australia are the main releases today (see GBP and AUD). Q1 GDP in the Eurozone is not expected to be revised from the provisional estimate of ‐ 0.6% q/q.

Citi

Risk sentiment found some stabilization overnight, with the DXY Index close to testing the 90 handle and Asia equities staging a modest recovery. This was led by the Taiwan benchmark index which is up as much as 5% at time of print. However with limited catalysts to note, it seems that flows continue to drive direction in the short term. On the technicals front, we note that EURUSD is approaching key resistance while gold has staged a significant breakout.

Q1 GDP prints are confirming the state of recovery in various economies. JPY growth undershot while THB saw a modest beat. RBA minutes did little to move the needle, and recent Fedspeak has been largely in line with expectations. Looking ahead, UK employment data and Eurozone Q1 GDP prints are unlikely to move markets.

AUD: The RBA released the minutes for the monetary policy meeting held on May 4. There are few new surprises in the minutes too, while the speech by Deputy Governor Guy Debelle last week sounded a bit hawkish. CitiFX Strategist Takashima-san notes that AUDUSD has been climbing today, but this mainly reflects (1) the overall USD weakness and (2) solid commodity prices. After recovering the 21d MA (around 0.776 now), no major resistance exists before the recent high at 0.7891, and we remain constructive with the pair in the medium term.

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.