The stand-out in overnight trade has been the rise in the Aussie, which gained some comfort from the better than expected print on CPI data. The trimmed and weighted measures were above expectations at 2.3% and 2.4% respectively. Yesterday’s minutes from the RBA again re-iterated the view that further easing “may be appropriate” and the longer held view that further depreciation was likely given recent trends in commodity prices. The Aussie moved towards the 0.7780 level as a result, which puts it even further away from the 0.7533 low seen earlier this month. The other points to note from overnight news was the trade data in Japan, which recorded the first surplus on the headline measures for 3 years.
Talking of central bank minutes, the BoE release of April minutes today at 08:30 GMT will be the main data focus for markets today. With headline inflation having fallen to zero, the debate will focus on just how transitory or more established this move will prove to be. The debate has become a lot more balanced in the past few months, with the market having pushed out the pricing of the first tightening back into 2016. As for sterling, this has been underperforming in recent weeks on the back of general election uncertainty, but there is a lot already in the price so if anything, the short-term risks are for a squeeze higher. The 1.5000/54 area remains crucial and a push above could see a greater squeeze higher ahead of the election.