Financial markets firmed in Asian amid expectations that the RBA would cut interest rates at the meeting tomorrow. The easing monetary policy is expected to boost Australia's economic outlook. The MSCI Asia Pacific Index (excluding Japan) added +0.7% in the early trading session. Better than expected manufacturing confidence data in South Korea overshadowed worries over the sovereign debt crisis in the Eurozone. In the commodity sector, crude oil prices changed little with the front-month contract for WTI crude oil continued to trade below 105. Gold moved sideways.
The market is pricing in that the RBA would reduce the cash rate by -25 bps to 4.25% at the May meeting. Some even forecast a bigger cut to 3.75% or 3.5% as the country's economy slowed down. GDP growth in 1Q11 eased to +0.4% q/q, following a downwardly revised +0.8% in the prior quarter. Elsewhere in South Korea, manufacturers' confidence climbed +5 points to 90 in May, the strongest in 9 months.
Commitments of Traders:
With the exception of natural gas, speculators were bearish over the energy complex in the week ended April 24. Net length for crude oil futures declined -1 169 contracts to 212 386. Net length for heating oil fell -2 564 contracts to 198 888 while that for gasoline dropped -7 743 contracts to 83 177. Net short for natural gas futures fell -5 733 contracts to 113 308.
Similarly, speculators were bearish on precious metals with the exception for palladium. Net length for gold futures dipped -7 011 contracts to 134 994 while that for silver dropped -1 936 contracts to 16 471 contracts. For PGMs, net length for platinum fell -4 079 contracts to 14 923 while that for palladium climbed 782 contracts to 5 745.