News

Aussie Pares Election Gains on Dovish RBA

AUD

The Australian dollar lost ground against rivals following the Minutes of the last monetary policy meeting and Governor Lowe speech. The Aussie kicked-off the week on a strong note after a surprise win for the center-right in the Federal elections. However, market participants shifted focus to the monetary policy meeting minutes, which confirmed the dovish stance of the Reserve Bank of Australia and hinted for an interest rate cut if the economic outlook weakened further. The Reserve Bank of Australia Governor Philip Lowe delivered a speech entitled "The Economic Outlook and Monetary Policy" affirming that the bank would consider a rate cut at June meeting. He referred that low-interest rates would support employment and help to lift inflation toward the target. The AUDUSD tumbled to a low of $0.6870, and the EURAUD soared to 1.6230.

USD

The dollar index which measures the greenback against a basket of major currencies resumed rally higher, after putting the daily winning streak to an end on Monday. DXY started the latest move higher on May 13th backed by solid US economic data which confirmed that the US economy is outperforming rivals. The index climbed to a four-week high of 98.11 ahead of the European trading session. The Brexit saga and the growing risks ahead of the European Parliamentary election are supporting the flow from European currencies to dollar safety. The US 10-year yields edged higher towards 2.428%, the USDJPY rose to 110.23, the EURUSD drifted lower to $1.1143, and the GBPUSD slipped to a fresh four-month low of $1.2704.

Metals

The price of gold ounce took a dip this morning to trade at a low of $1274 as the dollar regained strength along with US yields. On the other hand, the silver ounce recovered slightly from sharp losses and hovered near $14.40, while palladium inched higher to $1340.

Oil

Oil prices rose amid escalating geopolitical tensions and OPEC+ production cut plan. President Donald Trump tweeted threatening Iran with "great force." On the other hand, the Saudi Energy Minister declared that OPEC+ would likely continue cutting supply till the end of 2019. However, the recent trade tensions between China and the United States limited gains. Investors are afraid that the two largest economies will start a full-blown trade war which could deteriorate the global economy. The West Texas Intermediate crude futures climbed to a high of $63.79, and the Brent futures tested a four-week high of $73.39 but pared gains and settled at $72.03.

Major Economic Events

GMT Country Event Expectation Previous

Tentative

UK

Inflation Report Hearings  

 

 

14:00

US

Existing Home Sales (Apr)

5.35

5.21

21:30

US

API Weekly Crude Oil Stock

 

8.6

 

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