By Perry Mitchell
The AUD underperformed in yesterday’s Asian trading session after the release of the RBA Minutes from the May policy meeting. The minutes signaled that the central bank may be ready for a rate cut as soon as next month. A subsequent speech from Governor Lowe seemed to make the case for easing even more explicit, he went as far as to confirm that the policymakers have an easing bias and announced that the board will consider the case for a rate cut in June.
In addition to the RBA’s dovish shift, the lack of developments pointing to a possible solution to the US-China trade conflict continue to weigh on the AUD. The trump administration held off blacklisting Huawei Technologies out of the concern the move could disrupt trade negotiations with China. Although Trump didn’t blacklist Huawei, he has increased levies on $200 Billion in Chinese imports to 25% from the initial 10%. The US has said it’s prepared to hit China with new tariffs even as Trump said he will meet Xi Jinping at next month’s G-20 summit.
On the Brexit front, all eyes are on Theresa May as the hope of a convincing Brexit proposal helped the GBP rise. May has outlined a 10-point plan aimed at getting cross-party support to deliver Brexit. The UK prime minister will make a statement in the House of Commons tomorrow and the bill will be published in the next few days.
Locally today we have construction data to be released at 11:30 am, as well as the FOMC Meeting Minutes will be released later this evening.
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