Headlines:
- RBA surprises with 25 bps rate hike, cash rate raised to 4.10%
- Full statement of the RBA June 2023 monetary policy decision
- ECB's Knot: Inflation is still way too high but the worst is behind us
- BOJ's Ueda says to continue QQE until inflation target is achieved
- China calls on biggest banks to cut deposit rates to bolster the economy
- China regulator reportedly asks major state-owned banks to lower dollar deposit rates
- Eurozone April retail sales 0.0% vs +0.2% m/m expected
- Germany April industrial orders -0.4% vs +3.0% m/m expected
- Germany May construction PMI 43.9 vs 42.0 prior
- UK May construction PMI 51.6 vs 51.1 expected
Markets:
- AUD leads, EUR and GBP lag on the day
- European equities slightly lower; S&P 500 futures down 0.1%
- US 10-year yields down 2.1 bps to 3.671%
- Gold up 0.1% to $1,964.23
- WTI crude down 2.3% to $70.47
- Bitcoin up 0.1% to $25,673
The RBA was the main highlight at the tail end of Asia Pacific trading as they surprised markets with another 25 bps rate hike. That makes it back-to-back meetings now that the Australian central bank has defied expectations, raising the cash rate to now 4.10%.
The forward guidance passage remains unchanged from May, so they are potentially teeing up more rate hikes to come. Here is the change in the OIS curve before and after the RBA decision:
The aussie got a notable lift, with AUD/USD rising up from 0.6615 to a high of 0.6685 before coming off slightly now to around 0.6650-60 levels on the day.
As we got into European trading, it was a bit slower and quieter with equities not up to much. The overall mood remains more pensive and Treasury yields were slightly lower alongside European yields as well today.
That saw the dollar trade more mixed with slight gains against the euro and pound but keeping lower against the commodity currencies. USD/JPY is little changed as it hovers around 139.30-50 for the most part during the session.
We also got some headlines from China as authorities there are doubling down on trying to stimulate the economy, while also wanting to bolster the yuan currency. The latest measures look to be involving banks as Beijing calls to cut both local and dollar deposit rates.
Besides that, oil is facing another rough day after having seen its gap higher yesterday completely erased. WTI is down over 2% and closing in on the $70 mark as not even OPEC+ cuts are enough to turn the tide - at least for the time being.