It’s a quiet, range bound and directionless day in the markets with the UK and US on holiday. The dollar is flat having given up all its bumper US inflation (core PCE) gains late Friday.

Many economists believe that neither the CPI or PCE numbers have peaked this year and yet bond yields, an excellent indicator ahead of such news, are still very subdued (and actually fell on Friday).

Have we seen the temper tantrum already since US yields have advanced from 0.5% last August to a peak of 1.77% in late March?

While we covered in brief the defining economic data of the week, NFP, in our morning report, there are numerous other events that could move markets and currencies, some of them pointers along the way towards Friday’s release. The employment index of the ISM report out Tuesday and the ADP data the following day, as well as the weekly initial jobless claims may help inform on the US monthly job figures.

Wednesday’s ISM will also be closely watched to see if the manufacturing recovery is staying strong. Slowing growth in new orders and output dampened the previous month after the index raced to a 37-year high in March with a reading of 64.7. Fed Chair Powell speaks on Friday at a climate change conference along with the ECB’s Lagarde, and this week will be the last chance for several Fed officials to talk on policy before the blackout period starts on June 5.

RBA to follow the RBNZ?

‘No’ is most certainly the answer with weak inflation numbers and a slowdown in total employment combining to keep policy measures unchanged. In fact, the RBA did signal in their most recent minutes that they would make a decision on the next stage of their QE and bond yield control programme (YCC) at their July meeting. As economies open up round the world, so the RBA will be aware that the domestic recovery should improve, even as Melbourne has been forced into its fourth lockdown since the pandemic began.

AUD/USD has tracked sideways around 0.77 for some months now, sitting on the 50-day moving average and buffeted by competing forces on its economy.

Any hawkish tilt by the RBA, in step with the Bank of Canada and RBNZ, would see the bulls take charge and push the pair to the top of the range near this month’s high at 0.7891. If the meeting is simply a holding event, traders will wait for the US jobs data to see if the pair can find some direction.

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