FX Update: The Australian dollar came under pressure
FX Update: The Australian dollar came under pressure following sub forecast CPI data out of Australia, which catalysed calls for the RBA to cut interest rates at its next policy review in May, with many bank analysts also calling for a follow-up easing by August. Australian Q1 CPI came in at 0.0% against the median forecast for 0.2%. AUD-USD dove by 1%, the biggest one-day drop in nearly four months, to a six-week low at 0.7027. Early-March lows at 0.7003-05 are now back in range. AUD-JPY also declined by 1%, as did other Aussie crosses. Elsewhere, EUR-USD recouped back above 1.1200 after yesterday printing a three-week low at 1.1192. The narrow USD index has consolidated after edging out a 22-month high yesterday, which came amid strong U.S. data and record closing highs on Wall Street. USD-JPY continued to oscillate in a narrow range in the upper 111.0s. Equity markets have been mixed, with the main indices on Wall Street closing at record levels yesterday, while the main indices in Asia have continued to sputter. The MSCI Asia-Pacific (ex-Japan) index declined by 0.5%. Recent indications from Beijing that it will slow the pace of policy stimulus have continued to weigh on Chinese shares, while negative guidance on the demand for microchips from bellwether chipmaker Texas Instruments weighed too, particularly in South Korea. Japan's Nikkie 225 index closed with a 0.3% loss. In data, Japan's all-industry activity index came in at -0.2% m/m, as expected and to little market impact.