Australian dollar is generally lower as the week starts on weaker than expected China data and expectations that for RBA rate cut tomorrow. The final reading of HSBC China manufacturing PMI came it at 48.9 in April, down from initial estimate of 49.2 and prior month's 49.6. That's also the lowest level in a year since April 2014. The new order component dropped to 48.7, also the worst contraction in a year while employment component stayed in contraction for the 18th month. HSBC noted in the statement that the manufacturing sector had a weak start to Q2 with "total new business declining at the quickest rate in a year while production stagnated". And, the outlook called for further stimulus by the government to prevent deeper slowdown in the economy and to meet the 7% target this year.
Following the previous cut in February, we expect the RBA would trim the cash rate by 25 bps again to 2.00% this week. The move has been hinted in last month's statement and by Governor Glenn Stevens in New York. In both March and April, it's noted in the policy statements that the cash rate would stay where it was 'for the time being'. Whilst noting that housing price in Sydney is 'rather exuberant', Stevens suggested that 'interest rates should be quite accommodative and the question of whether they should be reduced further has to be on the table'. He added that 'the board has clearly signaled a willingness to lower it even further, should that be helpful in securing sustainable economic growth'. Meanwhile, the May Statement on Monetary Policy (SMP) due next Friday should contain downward revisions in GDP and inflation forecasts. More in RBA To Cut In May
In Eurozone, a Greece official was quoted saying that there were important steps made at the so called Brussels Group meeting over the weekend. And, an agreement was brought closer by the negotiations. It's reported that the group aims at reaching a deal within May. Nonetheless, Eurogroup president Jeroen Dijsslbloem stayed cautious and said that it's too early stay say the talks reached a turning point. Meanwhile, ECB's governing council will discuss on Wednesday on whether to increase discounts on the collateral it accepts from Greek banks for emergency funding.
Looking ahead for today, Swiss will release SVME PMI, Eurozone will release manufacturing PMI final and Sentix investor confidence. US will release factory orders.