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Price action was relatively tight on most pairs during today’s Asian session. The same can’t be said for Aussie pairs, though, since the Aussie was under bearish pressure throughout the session. The pound was also an exception, although pound pairs only began bustin’ the moves later (and without any apparent catalysts).

  • BRC shop price index y/y: -0.5% vs. -0.8% previous
  • AIG services index: 53.0 vs. 51.7 previous
  • Japan on holiday today

Major Events/Reports:

AIG services index improves, but details disappoint

AIG’s Australian performance of services index (PSI) rose from 51.7 to a three-month high of 53.0 in April, which is great.

However, some of the details aren’t really that great in the context of yesterday’s RBA statement.

Recall: the RBA was a bit more neutral yesterday, but it still expressed concern about a potential housing bubble. In addition, the RBA reiterated its warning that “Growth in housing debt has outpaced the slow growth in household incomes.”

And given that context, the following statement from AIG is actually kinda bad:

“Respondents to the Australian PSI® noted that suppliers to infrastructure construction projects experienced stronger demand. In other sectors, respondents reported lower customer demand due to the large number of public holidays in April this year.”

And despite the jump in the headline reading, only three of the nine sub-sectors were above the 50.0 level, with property and business services leading the way (56.9). The other six, meanwhile, were below the 50.0 level, including the retail trade sector (48.5). And that reinforces the RBA’s worries over the housing market.

Iron ore drops

After surging yesterday, Dalian iron ore dropped by 1.2% to 524.50 yuan per ton during today’s Asian session.

Market analysts blamed the fall on the decline in Chinese steel prices and Chinese steel mills holding back on buying, given that iron ore inventories at China’s major ports are near levels not seen since 2004.

Major Market Mover(s):

AUD

The Aussie got slammed by sellers right when the Asian session rolled around. There were no direct catalysts at the time, but the Aussie’s slide may have been a delayed reaction to AIG’s PSI report, since the Aussie only began moving lower a little over 30 minutes after AIG released its report.

Whatever the prime catalyst really was, it probably didn’t help (the Aussie) that iron ore price began to tank during the course of the session, which very likely helped to drag the Aussie lower.

AUD/USD was down by 41 pips (-0.55%) to 0.7501, AUD/JPY was down by 34 pips (-0.41%) to 84.11, AUD/NZD was down by 30 pips (-0.28%) to 1.0803

GBP

The pound, was mixed but slightly up during the early part of the session. However, the pound later began slumping across the board about halfway through the session. There were no apparent catalysts that could account for this wonky price action, however. No new polls, no data, no Brexit-related news, nothing.

However, renewed Brexit-jitters have been blamed on the pound’s overall poor performance this week so far. One of the more recent Brexit-related news is Theresa May supposedly getting blocked from negotiating with E.U. leaders. But that news got trampled by pound bulls yesterday since the pound was in full rally mode after the U.K.’s manufacturing PMI beat expectations.

GBP/USD was down by 35 pips (-0.28%) to 1.2905, GBP/JPY was down by 18 pips (-0.13%) to 144.72, GBP/CHF was down by 29 pips (-0.23%) to 1.2795

USD

The Greenback quietly advanced against its peers and ended up as the top dog of the session. There was no clear reason for the broad-based demand for the Greenback, but some market analysts pointed to cautious optimism ahead of the FOMC statement later.

USD/JPY was up by 16 pips (+0.15%) to 112.13, USD/CHF was up by 6 pips (+0.06%) to 0.9916, USD/CAD was up by 22 pips (+0.16%) to 1.3728

Watch Out For:

  • 7:00 am GMT: Spanish unemployment change (21.3K expected, -48.6K previous)
  • 7:55 am GMT: German unemployment change (-10K expected, -30K previous)
  • 8:30 am GMT: U.K. construction PMI (52.1 expected, 52.2 previous)
  • 9:00 am GMT: Euro Zone flash GDP (0.5% expected, 0.4% previous)
  • 9:00 am GMT: Euro Zone PPI (0.1% expected, 0.0% previous)