NEW ZEALAND: Q1 Current Account Narrows On Strong Goods Exports

The focus of the week will be on the RBA which is widely expected to cut rates 25bp to 3.85%. A statement on monetary policy including updated staff forecasts will also be published with the decision at 1430 AEST followed by Governor Bullock’s press conference at 1530 AEST. Deputy Governor Hauser speaks on Thursday at 1830 AEST about his trip to China.

• Data releases are minimal this week. Westpac’s April leading index is released on Wednesday. It fell in March and was showing signs of an impact from US trade policy announcements. The series leads detrended growth by three to nine months.
• Preliminary May S&P Global PMIs print on Thursday. They are signalling slight growth in activity across both services and manufacturing. 

In post-Tokyo trade on Friday, JGB futures closed weaker, -12 compared to settlement levels, after the cash US 10-year yield ranged from 4.3863% to 4.4770%, closing around 4.47% (+5bps).

• US tsy 10-year futures (TYM5) reacted in early Asia-Pacific dealings to late Friday's news that Moody's Ratings downgraded the US credit score.
• Bloomberg - "Moody's Ratings downgraded the US credit score to Aa1 from Aaa due to an increase in government debt and a higher interest burden."
• "Asked about the Moody's Ratings downgrade of the country's credit rating Friday during an interview on NBC's Meet the Press with Kristen Welker, Bessent said, "Moody's is a lagging indicator - that's what everyone thinks of credit agencies.""
• "The move follows downgrades by Fitch Ratings and S&P Global Ratings, with Moody's citing a decline in fiscal metrics that can no longer be counterbalanced by the US' economic and financial strengths."
• Today, the local calendar will see the Tertiary Industry Index alongside 1-year supply.
• The G7 will be holding a meeting from the 20th to the 22nd, there will be attention on any discussion between the US and Japan, particularly if foreign exchange rates are discussed concerning the tariffs.

Gold prices fell 1.1% on Friday to $3203.65/oz pressured by higher US yields after a low of $3154.60 to be down 3.6% on the week and 2.6% in May. Bullion has been trending lower since its peak on May 6 at $3435.62. The USD index rose 0.2%.

• Gold has trended down since May 6 as a corrective cycle takes place. Friday’s low was below key support at $3202.0, May 1 low, but the metal is currently trading just above this level at $3242.40. A clear break would open up $3085.0, a retracement point. Initial resistance is at $3265.4, 20-day EMA.
• It reached a month low of $3120.98 on Thursday, which was a breach of the 50-day EMA at $3168.0, but it then finished higher on the day.
• April activity data for China are released later today.