Australian bonds trade nearly flat in subdued session; markets await RBA's monetary policy statement

Australian government bonds traded nearly flat on Thursday as investors stayed sidelined amid a lack of any major news. However, Friday’sReserve Bank of Australia (RBA) policy statement will be closely watched to judge future policy action by the central bank.

The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, trades flat at 2.805 percent, the yield on the long-term 30-year Note dipped nearly 1/2 basis point to 3.227 percent and the yield on short-term 2-year remained steady at 2.069 percent by 03:00 GMT.

In the United States, Treasuries saw some volatility in the wake of the May FOMC statement on Wednesday but finished little changed overall as markets took in stride statement revisions that highlighted recent shifts in inflation data towards the Fed's 2 percent target (and highlighting its symmetry). On balance, we do not take any of these revisions to suggest that the Fed is on the cusp of becoming more aggressive.

However, should recent gains in inflation carry on further we are likely to a more definitive desire to deliver an additional 25 basis points rate hike in 2018 (100 basis points overall), particularly given that recent Fed forecasts were only one participant away from that being the median view at the March meeting.

Markets now look ahead to a greater flow of data on Thursday, highlighted by non-farm productivity/unit labor costs, jobless claims, trade balance, ISM non-manufacturing and factory orders releases. Nevertheless, greater focus remains on the April employment report due out on Friday (with significantly greater attention likely being paid to the status of average hourly earnings).

Meanwhile, the S&P/ASX 200 index traded 0.70 percent higher at 6,090.5 by 03:05 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 10.79 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest