ECB Cuts Nearly Priced In? RBA Minutes & Speeches Next

Comments continue to pour in from ECB policymakers suggesting action in June is virtually a done deal but the euro was the best performer Monday, showing moves might be priced in. AUD was the laggard on iron ore and ratings concerns. Australian will remain in focus with the RBA in focus in the hours ahead, inlcuding a speech from the RBA deputy governor Debelle.

The ECB's Mersch was straightforward in comments about monetary policy on Monday. He said the likelihood of ECB action next month has grown substantially and that the governing council is unanimous in its willingness to deploy conventional and non-conventional measures to counter the risks of long-term low inflation.

Nowotny mentioned Japan's lost decades in highlighting the risks and he added a comment about FX adding to low inflation risks.

The euro briefly rose to a four-day high of 1.3734 but slid back down to 1.3709 after the comments. Still, the fact that the euro was higher on the day suggests ECB action is largely priced in.

The other notable move in US trading was a slide in AUD. The trigger was a series of comments in the Australian press from an S&P official who said the sovereign rating could be at risk unless the government takes steps toward austerity. That's no surprise but with iron ore falling close to a nearly 2-year low it was enough to send AUD/USD to 0.9326.

The calendar focuses on Australia in the hours ahead starting with the March conference board leading index at 0000 GMT. The prior reading was 0.3% but this indicator is unlikely to move the market.

A bigger event is the release of the minutes of the May RBA meeting at 0130 GMT. If the RBA wants to clarify anything from the minutes, look to deputy governor Debelle's speech at 0230 GMT in Adelaide.

For Japan the main event is the April report on department store sales at 0530 GMT. That will be an early barometer on the impact of the consumption tax hike.