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Global Market Update
The View from Australia

Craig Killaby June 6, 2019

Data/Speakers

 

> AU April Trade Balance : 4.87B v. 5.05B exp.

> EU Monetary Policy Statement & Press Conference : 0.00% v. 0.00% exp.

> US Unemployment Claims : 218K v. 215K exp.

 

Overnight Headlines (BBG)

 

>  The U.S. is considering delaying President Donald Trump’s threatened tariffs on Mexico as talks continue, according to people familiar with the matter

 

What you need to know

 

Not a whole lot has changed in the last 24 hours, with the negotiations between the US and Mexico regarding the newly threatened tariffs seeing whippy price action for havens as risk appetite ebbs and flows. It was a relatively quiet day in Asia yesterday, with the AUD trading in a very tight range for the majority of the session despite the slight miss in the local trade figures. Overnight it was the ECB as the main event on the data docket as they kept policy unchanged, while Draghi was less dovish than anticipated in the statement/press conference the EUR was able to capitalize and set fresh highs against the Buck above 1.1300. In the US, it is all about trade as they continue their protectionist ways as they consider their options with their neighbours to the south. Reports circled that the Americans were considering delaying the tariffs, however nothing concrete has been done as yet. The measures are due to be enforced on the 10th June, so the headline risks are high for the remainder of the week. Price action in FX markets was largely muted with the exception of the EUR and CAD, the best performers of the session both up 0.5% against the Dollar as WTI crude’s 2.9% rally boosted the Loonie. The prospects of a tariff delay helped US equity markets, seeing the S&P500 finish up 0.6%. Mixed action in UST yields, with the 10y falling while the 2y was up 2.2bp. Base metals mixed with Copper up 0.8% and Iron ore down 0.9%. Gold continues to benefit from the haven flows up 0.25%.

 

The Day Ahead

 

Data

 

> AU May AIG Construction Index : 42.6 prev.

> CN Bank Holiday

> CA May Employment Change & Unemployment Rate : 5.0K & 5.7% exp.

> US May Average Hourly Earnings & Non-Farm Employment Change : 0.3% & 180K exp.

> US May Unemployment Rate : 3.6% exp.

 

Expecting a very quiet day in APAC today with a holiday Monday in NSW/VIC on Monday and no real economic data on the docket sideways trade is expected for the Aussie. Headline risk from the US on trade is what we are watching for today, with employment figures from Canada and the US the key data for the session. Would be surprised to see a sustained push in the AUD today, range trading below the 0.7000 handle the likely scenario.

 

Range for the day : 0.6960 -0.6995

 

AUD/USD Technicals

 

The May 10 high of 0.7019 looks to be capping the upside for the time being, as bulls need to be eyeing the 55DMA sitting at 0.7031 as the top resistance level. Downside has been unchanged as support still sits below the 06900 handle with 0.6865 and 0.6856 the levels to watch.

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