need2know: All eyes on RBA

What you need2know:

• SPI futures up 7 points to 5533

• AUD at 92.49 US cents, 94.75 Japanese yen, 68.02 Euro cents and 55.23 British pence

• On Wall St, S&P 500 +0.1%, Dow +0.2%, Nasdaq -0.1%

• In Europe, Euro Stoxx 50 +0.1%, FTSE +0.3%, CAC -0.1%, DAX +0.1%

• Iron ore gains 0.3% to $US92.10 per metric tonne

• Spot gold down 0.5% to $US1243.43 an ounce

• Brent oil slips 0.5% to $US108.86 per barrel

What’s on today

Australia retail trade, RBA cash rate announcement, current account deficit, net exports contributing to GDP, April retail sales, Queensland state budget, ACT budget;

New Zealand terms of trade index;

China non-manufacturing PMI, HSBC PMI manufacturing for May; EU unemployment, core CPI;

UK Nationwide house prices;

US factory orders, construction spending;

Japan labour cash earnings for April.

Stocks to watch

Virtus Health acquisition of SIMS IVF

Mirabela Nickel quarterly results

Deutsche Bank has maintained its “buy” recommendation on Peet Ltd following a slew of positive housing data. It has a 12-month price target of $1.70 on the stock.

Currencies

FXCM currency strategist, Ilya Spivak, is bearish on the Aussie this week on expectations it will find its direction from the US economic data and the RBA, which is expected to keep its wait-and-see monetary policy stance and keep the benchmark lending rate at 2.5 per cent.

US Treasuries yields rose, after falling to one-year lows last week, as investors completed month-end bond purchases and before a highly anticipated European Central Bank meeting and US employment report due later this week.

The European Central Bank has been given the lead role in work to strengthen codes of conduct for currency markets.

Commodities

Gold prices edged lower for a fifth day in a row, marking their longest losing streak in seven months as investors stuck with equity markets after US stocks hit another record high.

Caution ahead of the latest European Central Bank policy meeting and a rash of key US data due this week also kept gold bulls at bay.

Hedge funds and money managers cut their bullish wagers on US gold futures and options to the lowest level in nearly four months, weekly data released by the US Commodity Futures and Trading Commission on Friday showed.

United States

The Dow and the S&P 500 inched higher to start the week, recovering from earlier losses.

The CBOE Volatility Index rose 2.7 per cent but still hovered around lows not seen since March 2013.

The Institute for Supply Management’s manufacturing index for May, originally reported at 53.2, will be corrected to show a faster acceleration in factory activity last month, CNBC said on Monday, citing ISM as the source. After the correct seasonal adjustments, the figure is expected to come in closer to the 55.5 reading expected by market economists in a Reuters survey. CNBC initially reported the correction would be to a reading of 56.

The Pimco Total Return Fund, the world's largest bond fund run by Bill Gross, posted $US4.3 billion in net outflows in May, marking the 13th straight month of outflows from the fund, Morningstar data showed

Europe

European shares started the month positively on Monday, buoyed by upbeat economic data from China that helped to allay worries about growth rates there. Basic resources stocks, including miners and other commodity companies, rose 1.5 per cent, one of the biggest sectoral gainers, after data showed Chinese factory activity expanded at its fastest pace in five months in May.

Germany’s DAX firmed 0.1 per cent, or 6.85 points, to 9950.12, within touching distance of breaking the 10,000 mark for the first time. Whether it will be able to pass this barrier is linked to whether expectations of stimulus from the European Central Bank later in the week are delivered on, analysts said.

What happened yesterday

The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index added each 0.5 per cent on Monday, to 5518.5 and 5499.2 respectively, with economists and investors tipping the Reserve Bank will hold rates at the current record low of 2.5 per cent when it meets on Tuesday.