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Market price action was as tight as Big Pippin’s post-barbeque party pants, as traders price in a cocktail mix of economic themes.

  • U.K.’s BRC retail sales monitor (y/y) up by 2.8% vs. 4.2% decline in April
  • Japan’s household spending (y/y) down by 1.3% vs. 0.8% increase expected, 0.7% decline in March
  • Australia posts 10.4B AUD current account deficit in Q1 2018 vs. 9.9B AUD deficit expected, 14.7B AUD shortfall in Q4 2017
  • RBA keeps rates at 1.50% as expected in June
  • New Zealand’s Treasury: Q1 2018 GDP “may fall short of 0.7% forecast”
  • China’s Caixin services PMI steadies at 52.9 in May

Major Events/Reports:

Australia’s current account surprise

Just before the RBA published its June decision, we first saw the Land Down Under’s current account deficit narrow down from an upwardly revised 14.66B AUD to 10.47B AUD in Q1 2018.

Turns out, an improvement in Australia’s data helped limit the current account deficit to its lowest since Q1 2017. Still, the upward revision in the previous quarter’s numbers weighed on the Aussie early in the Asian session.

RBA keeps rates at record low of 1.5%

As expected, the Reserve Bank of Australia (RBA) kept its interest rates at 1.50% for another month in June.

Though Governor Philip Lowe and his team still believe that recent data are consistent with the above 3.0% growth forecast for 2018 and 2019, they’ve also kept their cautious tone in their statement.

For example, the central bank is still worried about household consumption that’s threatened by slow income growth and growing household debt levels. Ditto for Australia’s terms of trade, which is “expected to decline over the next few years” even as they remain at high levels.

Last but not the least are shout-out of “uncertainties” that include “political developments” in Italy; “direction of international trade policy” in the U.S., and “economic developments in a few emerging market economies.”

At the end of the day the RBA is still betting on progress in its inflation and employment goals, though “progress is likely to be gradual.” Unfortunately, the cautious tone and a lack of fresh insight were enough to keep the bulls at bay during the session.

Fragile risk appetite

Market bulls barely edged out the bears today, as an optimistic U.S. NFP report; a strong day for Wall Street, and easing political tensions in the euro region all helped risk sentiment.

However, the risk-friendly vibe was also peppered with trade-related concerns as well as worries that the U.S. and North Korea might not reach a deal in time for Donald Trump and Kim Jong-Un’s meeting later this month.

  • Nikkei is up by 0.04% to 22,4384.8
  • A SX 200 is up by 0.06% to 6,008.7
  • Hang Seng is up by 0.16% to 31,046.5
  • Shanghai index is up by 0.23% to 3,098.342

Gold edged higher as the Greenback took a few pips back, while oil prices caught a few points after being weighed down by supply concerns over the past couple of days.

  • Gold is up by 0.02% to $1,292.20
  • Brent crude oil is up by 0.25% to $75.54
  • U.S. WTI is up by 0.43% to $65.14

Major Market Mover(s):

AUD

An RBA non-event event wasn’t enough to push the Aussie to positive territory after a current account miss early in the session dragged the comdoll lower.

AUD/USD is down by 11 pips (-0.15%) to 1.0864
EUR/AUD is up by 16 pips (+0.10%) to 1.5309
GBP/AUD is up by 31 pips (+0.18%) to 1.7429
AUD/NZD is up by 10 pips (+0.09%) to 1.0864

CHF

There was no catalyst to explain the move (save for SNB intervention) but the Swiss franc ended up losing pips across the board.

NZD/CHF is up by 9 pips (+0.12%) to .6950
USD/CHF is up by 11 pips (+0.11%) to .9888
CAD/CHF is up by 7 pips (+0.09%) to .7646
GBP/CHF is up by 11 pips (+0.08%) to 1.3161

Watch Out For:

  • 6:45 am GMT: France’s government budget balance
  • 7:15 am GMT: Spain’s services PMI (56.4 expected, 55.6 previous)
  • 7:45 am GMT: Italy’s services PMI (52.9 expected, 52.6 previous)
  • 7:50 am GMT: France’s final services PMI to remain at 54.3?
  • 7:55 am GMT: No changes expected from Germany’s final services PMI (52.1)
  • 8:00 am GMT: Euro Zone’s final services PMI to keep its 53.9 reading?
  • 8:30 am GMT: U.K.’s services PMI. Read Forex Gump’s trading guide here!
  • 9:00 am GMT: Euro Zone’s retail sales (0.5% expected, 0.1% previous)
  • 10:00 am GMT: BOE MPC member Jon Cunliffe to give a speech in London