A big pullback in commodity markets sparked a sell off in the commodity currencies overnight, with the AUD falling back below USD1.0800.

Australia: The AUD took an initial hit yesterday when reports began to emerge that high profile investor George Soros was a seller of gold. The price of silver has also fallen dramatically over the last few days, losing 19% of its value since Friday of last week.

[Sign up here to get this report delivered to your inbox daily]

The AUD has steadied this morning around USD1.0750 and will likely remain around these levels ahead of this morning’s release of Retail Sales and Building Approvals data. Market expectations are for retail sales to have risen by 0.5% in March, while building approvals are expected to have increased by 5.0% in March. The results will be watched carefully as the RBA will also be keeping an eye on these data releases ahead of their Board meeting next month.

Majors: Most of the Northern hemisphere markets were lower overnight as investor nervousness led to heavy selling of equities and commodities. US data releases disappointed, with US private sector employment increasing by 179k in April; below expectations for an increase of 207k.

The US ISM non-manufacturing survey also came in well below expectations, at 52.8 in April as opposed to an expected 57.5. US and European equity markets were sold off as a result, with the DJIA closing 0.7% lower and the Euro Stoxx falling by 1.6%.

Tonight’s focus will be firmly on the ECB and BoE interest rates announcements. While it is widely anticipated that neither central bank will increase official interest rates, the accompanying statements, particularly from the ECB, will be closely scrutinized for any hint on the timing of future interest rate changes. The ECB raised borrowing costs in April for the first time in 3 years and there is a possibility they could increase rates again as early as June as they try and contain emerging inflationary pressures.
Economic Calendar
AUS HIA New Home Sales Mar
EU Euro-zone Retail Sales Mar
US ADP Employment Change Apr

More from IBT Markets:
Newsletter: To receive Global Markets update, sign up here