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Concerns that the U.S. would back out of the Iran nuclear deal pushed oil prices (and the Loonie) higher.

Meanwhile, the RBA’s policy decision turned out to be a non-event and had barely any effect on the Aussie’s intraday price action.

  • China’s markets out on Labor Day holiday
  • Australia’s AIG manufacturing index slips from 63.1 to 58.3 in April
  • New Zealand’s building consents up by 14.7% vs. 6.4% gain in February
  • Japan’s manufacturing PMI revised higher from 53.3 to 53.8 in April
  • RBA keeps rates at 1.50% as expected

Major Events/Reports:

RBA keeps rates steady at 1.50%

As expected, the Reserve Bank of Australia (RBA) kept its monetary policies steady for another month in May.

Like in the previous month, the central bank still believes that growth will average above 3.0% in 2018 and 2019, and that stronger growth in exports as expected. It’s also still worried over household consumption even as consumption growth picked up in 2017.

On inflation, RBA maintained that it’s “likely to remain low for some time” thanks to retail competition and low growth in labour costs. CPI is still expected to be “a bit above 2% in 2018.”

Nothing new from Governor Philip Lowe and his team, which is probably why the Aussie barely reacted to the report’s release.

Iran’s nuclear deal getting murky?

As mentioned in the U.S. session recap, a presentation by Israel’s PM Netanyahu sparked concerns that the U.S. would pull out of Iran’s nuclear deal and once again impose sanctions on the oil-producing territory.

The plot thickened a few hours later when the White House shared that Israel’s information provides “new and compelling details” about Iran’s efforts to develop “missile-deliverable nuclear weapons.” It added that:

“These facts are consistent with what the United States has long known: Iran had a robust, clandestine nuclear weapons program that it has tried and failed to hide from the world and from its own people.”

It also doesn’t help that U.S. Secretary of State Mike Pompeo shared that “the documents obtained by Israel from inside Iran show beyond any doubt that the Iranian regime was not telling the truth,” and that the U.S. is now “assessing what the discovery of Iran’s secret nuclear files means for the future.

Market players have yet to show significant reaction to the developments, but we might see a bit more volatility during the U.S. session.

For now, score one for war profiteers?

Upbeat risk sentiment

With China out on Labor Day holiday and most of Japan likely on vacation mode (Thursday and Friday are also holidays), there wasn’t a lot of volatility to go around.

That didn’t stop traders from pushing equities higher, though.

  • Nikkei is up by 0.07% to 22,482.8
  • Australia’s A SX 200 is up by 0.80% to 6,003.1
  • Hang Seng is up by 1.74% to 30,808.5

Meanwhile, gold prices inched lower in anticipation of a hawkish FOMC statement later this week, while oil prices edged higher on the back of the U.S. possibly backing out of Iran’s nuclear deal.

  • Gold is down by 0.25% to $1,312.20
  • Brent crude oil is up by 0.31% to $74.86
  • U.S. WTI is up by 0.31% to $68.75

Major Market Mover(s):

The Aussie might not have reacted a lot to the RBA’s release, but it was able to extend its gains from the previous sessions.

AUD/USD is up by 12 pips (+0.16%) to .7540
AUD/JPY is up by 15 pips (+0.18%) to 82.46
AUD/CHF is up by 16 pips (+0.22%) to .7476
AUD/NZD is up by 17 pips (+0.16%) to 1.0716
EUR/AUD is down by 22 pips (-0.14%) to 1.6015

The potential fallout of Iran’s nuclear deal, or at least increased geopolitical conflicts in the region boosted oil prices (and the oil-related Loonie) for most of the session.

USD/CAD is down by 17 pips (-0.14%) to 1.2825
CAD/JPY is up by 15 pips (+0.18%) to 85.28
CAD/CHF is up by 16 pips (+0.20%) to .7730
EUR/CAD is down by 23 pips (-0.15%) to 1.5487

Watch Out For:

  • Most European markets closed on Labor Day holiday
  • 6:30 am GMT: Australia’s commodity prices (y/y)
  • 8:30 am GMT: U.K.’s manufacturing PMI (54.8 expected, 55.1 previous)
  • 8:30 am GMT: U.K.’s net individual lending (4.9B GBP expected, 5.4B GBP previous)
  • 8:30 am GMT: U.K.’s mortgage approvals (63K expected, 64K previous)
  • 9:20 am GMT: RBA Governor Philip Lowe to give a speech in Adelaide