The Aussie droped sharply during the Asian session today after release of the minutes of RBA meeting on May 6. The minutes noted that growth in the coming quarters down under would be "below trend" due to slow export growth, declining mining investment and the fiscal consolidation. And, "with growth in activity expected to pick up only gradually, and spare capacity in the labor market consequently remaining for some time, growth in domestic costs was forecast to remain contained." Also, "the demand for labour remains subdued and was likely to remain so for some time". And it reiterated the stance that accommodative policy would be in place for "some time yet". Technically, the AUD/USD's break of 0.9137 minor support suggests that recent rebound is already over and bias is turned back to the downside for retesting 0.9201 support.
In Europe, the ECB executive board member Mersch said that the likelihood for June action "has grown substantially" even though there is no sign of materialization in the deflationary scenario. Governing council member Nowotny said the deposit rate can go into negative territory Bundesbank chief said that "it would be shortsighted" to consider one side of the impact of exchange rate. That is, the negative effect of high euro exchange rate on inflation. He noted that "in order to strengthen growth and employment in the euro area permanently, member states must ensure competitive economic structures" instead of relying on the euro exchange rate.
In the US, San Francisco Fed Williams said the Fed is "closing in on the final stages of tapering". And, "given where inflation is and where the labor market is, given the various risks to the outlook, I don't think it's appropriate to start raising interest rates until the second half of next year." He noted that the tests on overnight reverse repo have be "very successful". And, it should be part of Fed's "toolkit" on policy exit.
Looking ahead, inflation data from UK is the main focus today. That include CPI, RPI and PPI. German will also release PPI.