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Global Market Update
The View from Australia

by Craig Killaby | March 30, 2021



> NZ February Building Consents : -18.2% v. 1.5% revised prev.

> EU February German Import Prices : 1.7% v. 1.2% exp.

> US March CB Consumer Confidence : 109.7 v. 96.9 exp.


Overnight Headlines (BBG)

> Investors brace for potential risks from the unwind of the Archegos positions, with the total losses still unknown although thought to be large for those exposed

> Strong move higher in UST yields, supporting the USD as the yield touched the highest level since January 2020 as growth expectations continue to rise

What you need to know

Very choppy trading as we head into the final day of the month and quarter, with the USD on the front foot as UST yields rise with markets keeping one eye on the very important infrastructure spending plan to come tomorrow. The data docket was light in Asia, with the AUDUSD trading well within its recent range and finding resistance around the 0.7660 level before retreating quickly. Equity markets had a tough session locally, with potential contagion risk from the Archegos fallout putting downward pressure on local markets while the virus situation in Brisbane also seems to be weighing down sentiment. The ASX closed the session down 0.9%, while Japanese stocks continue to be the hardest hit as the Nomura loss reverberates.

In Europe, the ship in the Suez Canal has now been dislodged and trade can resume to its normal path. Vaccination rollouts continue to be the focus in the region, while the continued bad news for the AstraZeneca vaccine weighs on the sentiment in the region. EURUSD struggled, down as much as 0.55% on the session.  All eyes in the US are on the infrastructure spending plan, with more stimulus from the government likely to be a boon for the US economy that has blown away the rest of the world when it comes to vaccinations. UST yields rising to 14 month highs, underpinning strength in the Dollar, which is up another 0.4% in DXY terms although EOM/Q flows likely influencing some of the moves. Strong USD moves saw commodity markets have a tough session, with Gold and Oil the biggest losers down 1.6 and 1.8% respectively. Iron Ore remains stable, up 0.5% while Copper also struggled down 1.4%.

The Day Ahead




> NZ March Final ANZ Business Confidence : 0.0 prev.

> AU February Building Approvals : 3.5% exp.

> AU February Private Sector Credit : 0.3% exp.

> CN March Manufacturing & Services PMI : 51.3 & 51.9 exp.

> UK Q1 Final GDP : 1.0% exp.

> EU March H/Line CPI Flash Estimate & Core CPI Flash Estimate : 1.4% & 1.1% exp.

> US March ADP Non-Farm Employment Change : 552K exp.

> US February Pending Home Sales : -3.1% exp.

> US EIA Crude Oil Inventories : -1.3M exp.


Finally a bit of data to trade for the local session, however with EOM/Q flows expected it may be a very difficult day to predict the price action. Local building and credit numbers kicks it all off this morning, while the main event will be the Chinese PMIs due to hit the wires mid-day. Expecting caution from investors as the infrastructure spending announcement from Biden will be all important, with the chance of a sustained move higher in UST yields seeing some more USD strength as it continues its rebound. The recent low looks vulnerable today, however expect the direction to come from the Chinese PMIs.


Range for the day : 0.7560 – 0.7630


AUD/USD Technicals


Still no range break for the pair, with 0.7550-0.7660 still holding as we approach the EOM/EOQ. Further Dollar demand may see the low of 0.7563 broken today, with momentum starting to build for a Dollar comeback in the medium term. A bout of risk appetite may see the pair rally up towards the 100DMA at 0.7627, however 0.7660 needs to hold to bring 0.7700 back into play.


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