The US$ has maintained its firm note on Monday, although mostly contained within the range of the last two sessions, after the US data indicated that US personal income rose 0.3% mm in March, below expectation of 0.4%, while personal spending rose 0.4%, in-line with consensus. The headline PCE accelerated to 2.0% yy in March, up from 1.7% yy in February, in line with expectations. Core PCE accelerated to 1.9% yy, up from 1.6% yy, also meeting expectations. The Chicago Purchasing Managers Index beat expectations while the Dallas Fed Mfg Business Climate came in at a firm 21.80, compared to 21.40 the previous month, further underpinning the dollar. Earlier, during the EU session, the March German Retail Sales missed badly, coming in at -0.6%mm, as opposed to expectations of +0.8%, undermining the Euro in the process. The commodity bloc remains under pressure, with both the Aud and Kiwi trading at new trend lows. US stocks fell, by around 0.75%, as healthcare stocks slid, while a higher oil price and a looming deadline for exemptions to US steel and aluminum tariffs weighed on investor sentiment. Gold took a hit, down $8per oz, under pressure from the stronger dollar.
Tuesday will begin with the RBA Meeting although no change to policy is expected and it will be the statement that is in focus. In particular, traders will be keen to see whether Governor Lowe will indicate that the RBA is cutting its 2018 GDP forecast. The forecasts will be released in the quarterly Statement on Monetary Policy on Friday, with the RBA expected to lower its growth forecast from 3.25% to 3.0%. Otherwise, the coming session should be quiet, with it being the EU May-Day holiday although the US will get the ISM Mfg PMI/Prices Paid data. It could be a fairly quiet day as most traders will be looking towards tomorrow’s FOMC Meeting and Statement, in what will be a busy day.
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