Daily Market Digest: RBA Minutes, Inflation Numbers From US & UK

The Australian dollar erased some of its previous losses as RBA minutes showed that members were hesitant to cut rates. Meanwhile, inflation data from the UK disappointed while in the US inflation increased at the fastest pace since February 2013.

Today’s Economic events

RBA releases monetary policy meeting minutes

Australia new motor vehicle sales m/ -2.50% vs. 2.20% previously

New Zealand inflation expectations q/q 1.60% vs. 1.60% previously

Japan revised industrial production m/m 3.80% vs. 3.60%

Switzerland PPI m/m 0.30% vs. 0.10%

UK CPI y/y 0.30% vs. 0.50%; Core CPI y/y 1.20% vs. 1.50%

Canada manufacturing sales m/m -0.90% vs. -0.70%

US CPI m/m 0.40% vs. 0.30%; Core CPI m/m 0.20% vs. 0.20%

US building permits m/m 3.60% vs. 5.50%

US housing starts m/m 6.60% vs. 3.30%2

Coming up

The US capacity utilization rate

The US industrial production

New Zealand GDT price index

New Zealand PPI q/q

RBA’s meeting minutes sends AUD higher

The meeting minutes from the RBA’s monetary policy decision in early May which led to a 25bps rate cut saw a mixed reaction. The meeting minutes from the RBA released today showed that members were largely divided on cutting rates with some preferring to defer the decision until later. The RBA cut rates by 25bps in May, bringing interest rate to 1.75%, after leaving rates steady for over a year at 2.0%.

According to the minutes, “Members discussed the merits of adjusting policy at this meeting or awaiting further information before acting. On balance, members were persuaded that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting.“

The Australian dollar gained on the release as it is likely that expectations for further rate cuts diminish. Economic data from Australia following the RBA rate cut included the trade balance data showed a surplus, indicating that the upcoming GDP numbers could be positive. Unemployment data from Australia is due for release on 19th May, Thursday, which will be the next big fundamental risk with forecasts that the unemployment rate increased to 5.80% in April from 5.70% in March.