Markets are relatively quiet in Asian session today despite some important economic data release. Q1 GDP of Japan was finalized at 1.0% qoq, revised up from 0.7% qoq. Annualized rate was revised to 3.9%, up from prior estimate of 2.4%. The data was seen as positive and showed that recovery is picking up pace. Released from China, trade surplus widened to USD 59.5b in May, much higher than expectation of USD 47.0b. Imports dropped sharply by -17.6% yoy while exports dropped -2.5% yoy. Looking ahead, Germany will release industrial production and trade balance in European session while Eurozone will release Sentix Investor confidence. Canada will release housing starts and building permits later in the day.
As for the week ahead, there are some important events down under. That include RBNZ rate decision, Australia employment. Also, volatility could be triggered in both Kiwi and Aussie by a string of data fro China. Elsewhere, Sterling would look into trade balance and productions. Dollar will look into retail sales in particular.
- Tuesday: China inflation; Australia business confidence and home loans; Japan consumer confidence; Swiss unemployment, CPI; UK trade balance; Eurozone GDP revision; US wholesale inventories
- Wednesday: UK industrial and manufacturing production
- Thursday: RBNZ rate decision; Australia employment; China industrial production, retail sales, fixed asset investment; US retail sales, jobless claims
- Friday: Eurozone industrial production; US PPI, U of Michigan sentiment
The market is pricing in a higher chance of RBNZ rate cut in the meeting on June 11. OIS, currently at 3.3328%, is implying a 67% of a -25-bps cut. Yet, the majority of analyst has continued to expect the central bank to keep its powder dry next week. Currently, only Deutsche Bank (XETRA:DBKGn), ANZ, and RBC are expecting the OCR to be lowered to 3.25% whilst others forecast it to stay at 3.5%. We expect, no matter a cut would adopt in June or not, the RBNZ to deliver a rather dovish message in the post-meeting statement given the soft economic developments of late. More in Chance Of RBNZ Rate Cut Increases.
NZD/USD's medium term up trend from 0.4890 could be seen as finished with a failure fifth at 0.8835. And the sustained trading below 55 months EMA argue that the long term trend from 0.3900 (2000 low) is revering too. Based on current momentum, 38.2% retracement of 0.3900 to 0.8835 at 0.6950 should be taken out easily. We'll looking at at least a break of 50% retracement at 0.6368 in medium term.
