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Global Market Update
The View from Australia

Craig Killaby July 8, 2019

Data/Speakers

 

> JP May Current Account : 1.31T v. 1.24T exp.

> AU June ANZ Job Advertisements : 4.6% v. -8.2%(revised) exp.

> EU May German Industrial Production & Trade Balance : 0.3% & 17.1B v. 0.4% & 16.8B exp.

 

Overnight Headlines (BBG)

 

>  Oil pared gains as Iran’s threats to retaliate over a seized crude tanker and word of a foiled attack in the Red Sea triggered new worries about supply disruptions

 

What you need to know

 

As expected it was a very quiet day in APAC yesterday, with the AUD drifting higher throughout the session as the price of Iron ore rebounded and ANZ job ads boosted the currency. The market seems to have now shifted from the Non-Farm Payrolls Friday to the very important testimony from the Fed Chair in the latter portion of the week as markets eagerly await what the Fed’s benchmark lending rate will look like for the remainder of 2019. The Dollar was up a touch in DXY terms, finishing 0.10% higher. While the AUD crosses mixed with no major moves to mention. The AUDUSD high on the session was 0.6994, unable to test the 0.7000 handle with no data catalysts. USDJPY went to 108.80, the highest level in a month while the EUR looked to be under pressure after a slight miss in Germany’s May industrial production levels. Apart from the 3.6% rally in Iron Ore, there was not much movement in the commodities space with most major indexes largely unch on the session.

 

The Day Ahead

 

Data

 

> AU June NAB Business Confidence : 7 prev.

> CA June Housing Starts : 209K exp.

> CA June Building Permits : -10.0% exp.

> US Fed Chair Powell to speak

> US FOMC Members Bullard and Quarles to speak

 

The data will start to pick up today, however not expecting a whole lot to change on NAB’s business survey this morning as the USD is the one to watch for the time being. All eyes will be on Fed Chair Powell as he starts what is going to be a busy week of Fed jawboning, while Bullard and Quarles are also due to hit the wires. After the Fed had looked poised to keep their policy path unchanged in the front half of the year, the sudden shift of eluding to lower rates has gotten markets ready for a weaker Dollar. Trump’s clear desire for this can not be understated, however we should get a better idea of the remainder of the year’s outlook by week end.

 

Range for the day : 0.6960 – 0.7005

 

AUD/USD Technicals

It was a tight range for the pair yesterday, coming within a pip of the forecasted high on very little data. The 55SMA is acting as strong support, currently sitting a touch below 0.6960 while trading between the 55SMA and the 10SMA for a lackluster session. To break the recent range a push above the 100SMA at 0.7028 will need to be seen while the 200SMA will keep those runs in check until at least the EOW.

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