Talking Points:

Aussie Dollar Gains After Flat RBA Outcome, China Data a Possible Trigger
German Jobs, Eurozone and UK PMIs May Not Drive EUR & GBP Volatility
US Dollar Looking for a Lifeline in Upbeat ISM Print’s Impact on Fed Bets

The Australian Dollar edged higher after the Reserve Bank of Australia delivered a status-quo monetary policy announcement. Glenn Stevens and company left the benchmark lending rate unchanged at 2.50 percent as expected and once again argued for a “period of stability” going forward.

Absent anything meaningfully outside the priced-in policy outlook from the RBA, the Aussie’s move higher may have been a latent response to Chinese Manufacturing PMI figures released earlier in the day. The official gauge rose to a six-month high of 51.0 while the analogous measure from HSBC rose to a 15-month high of 50.7.

China is Australia’s largest trading partner and a pickup in activity there may bode well for the latter country’s pivotal export sector. In turn, this may ultimately offer a boost to broader growth and set the stage for a less accommodative monetary policy stance.

The economic calendar is relatively quiet in European trading hours. June’s German Unemployment figures and the final revision of the Eurozone Manufacturing PMI print headline the docket. The outcomes are unlikely to carry meaningful implications for ECB monetary policy bets as traders await the central bank’s rate decision later in the week, implying a lackluster response from the Euro.

A slight pullback in UK Manufacturing PMI may likewise pass with little fanfare. The report is expected to show factory-sector activity growth slowed for the second consecutive month in June. UK news-flow has increasingly underperformed relative to expectations recently, suggesting analysts are overestimating the strength of the economy and opening the door for a downside surprise. The British Pound has ignored the string of disappointments on the data front since early April however, so it is difficult to argue that this time will necessarily prove different.

Later in the day, the spotlight turns to the US ISM Manufacturing figure. Consensus forecasts are calling for a print at 55.9, the strongest outcome since December 2013. An upbeat outcome may help narrow the perceived time gap between the end of Fed QE (expected later this year) and the beginning of outright tightening. That may engineer a bounce in the US Dollar after the benchmark currency slid below a pivotal technical barrier.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

23:00

AUD

RPData/Rismark House Px (MoM) (JUN)

1.4%

–

-1.9%

23:30

NZD

ANZ Roy Morgan Consumer Conf Index

105.4

–

105.7

23:30

AUD

AiG Performance of Mfg Index (JUN)

48.9

–

49.2