World Fist Update
Rate decision & GDP headline the week
As we move into a new month, the Australian dollar will be looking for a sense of direction with a busy week featuring the rate decision and GDP report.
Finishing the week, the Australian data disappointed with capital expenditure increasing by only 0.4% and building approvals plunging by 5%. The greenback gained some momentum on an upbeat jobs report which showed an increase of 223k gained and also some safe haven flows related to the Italian crisis.
Today 13:30pm AEST sees the release of retail sales, which is expecting to see a rise of 0.3% following a dismal March report. However tomorrows rate decision from the RBA and talk from Assistant Governor, Michele Bullock is setting up to be the weeks blockbuster event for the Aussie. Although rates have remained unchanged at 1.5% since mid-2016 with this time unlikely to be any different, the RBA has recently raised its growth forecasts. It will also be interesting to see if the bank mentions global trade tensions in its statement.
UK manufacturing gives the pound a much needed boost
The UK enjoyed a strong bid at the close of last week, courtesy of better than forecasted manufacturing numbers which suggests the economy may be recovering nicely.
Looking ahead, tonight’s construction PMI numbers for May lead the way, with forecasts at 51.9. Although construction PMI is typically ignored by markets, due to the slowdown we saw at the start of the year, foreign exchange markets will be paying more attention to this release than normal.