Overnight RBA Governor Glenn Stevens gave a speech where he once again took a very dovish stance and even hinted at further rate cuts in the months ahead, despite in the past an easing bias consistently being omitted from official policy. The initial weakness in AUDUSD saw the rate decline a mere 40 pips before reversing the losses with a 100 pip rally and we are now sitting at 0.7735 but this strength has come largely at the expense of a wider dollar sell off following comments from the BOJ’s Governor Kuroda who poured doubt over the prospects of further BOJ easing and this has caused USDJPY to fall to a two week low at 122.75, a move that has led to other gains for currencies against the US dollar. This has allowed EURUSD to recapture 1.1300 as the single currency remains defiant in the face of ongoing negotiations between Greece and its creditors. For the umpteenth time Tsipras meets with Merkel and Hollande to discuss their stances as Merkel is starting to apply pressure by sending the message that the end of June marks the end of the road where agreement has to be made.
From an economic data perspective today we have UK industrial and manufacturing production which could cause a move in sterling, but the bigger event for the British pound is tonight’s Mansion House speech where the Chancellor and BOE Governor speak. Any change in the current expectations of a rate hike from the BOE by this time next year could see big moves in sterling as we’ve seen from past Mansion House speeches. Also, later tonight watch out for the kiwi as the RBNZ makes its latest interest rate decision.