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Global Market Update
The View from Australia

by Craig Killaby | March 31, 2021



> NZ March Final ANZ Business Confidence : -4.1 v. 0.0 prev.

> AU February Building Approvals : 21.6% v. 3.5% exp.

> AU February Private Sector Credit : 0.2% v. 0.3% exp.

> CN March Manufacturing & Services PMI : 51.9 & 56.3 v. 51.3 & 51.9 exp.

> UK Q1 Final GDP : 1.3% v. 1.0% exp.

> EU March H/Line CPI Flash Estimate & Core CPI Flash Estimate : 1.3% & 0.9% v. 1.4% & 1.1% exp.

> US March ADP Non-Farm Employment Change : 517K v. 552K exp.

> US February Pending Home Sales : -10.6% v. -3.1% exp.

> US EIA Crude Oil Inventories : -0.9M v. -1.3M exp.


Overnight Headlines (BBG)

> Lockdowns are expected to be extended in Europe as the region struggles with another surge of cases due to COVID19 variant strains

> Markets await the US$2.25trillion infrastructure stimulus plan to be announced this morning, with focus most importantly on how they plan to pay for the plan with corporations likely to be taxed

What you need to know

Opening up this morning on the first day of Q2 locally, the Aussie looks to be under pressure as investors look ahead to President Biden’s massive infrastructure plan to be announced as I am writing. The movements were choppy yesterday as flows into the respective currency fixes saw moves, with havens seeing big moves with the JPY leading the losses in early trading. Investors are starting to flag potential risks to the growth expectations with COVID19 still wreaking havoc in many countries around the world, the vaccination rollouts are just not meeting forecasts. Chinese data was positive, with both manufacturing/services PMIs beating expectations with the services numbers posting strong gains in the month.

In Europe, with lockdowns likely to be extended in France and Italy the region is taking a large step backwards in the fight against COVID19 as they struggle with the vaccination rollout. In the US, it was similar sort of choppy trade to the European and Asian session with investors remaining cautious ahead of the infrastructure announcement. US private payroll numbers missed the mark, showing that there is still a ways to go in the recovery. FX market moves were relatively muted, with the Dollar unchanged on the day in DXY terms. The AUDUSD down a touch, while the crosses are mixed. AUDJPY and AUDCHF are the best performers on the session, up 0.4%. Equity markets up, with the S&P500 finishing the session up 0.4% ahead of Biden’s speech. UST yields up a touch, with the 10y up above 1.74% as I write. Commodity markets mixed with Gold rebounding 1.4% while WTI crude struggled, down 1.9%.

The Day Ahead




> AU March AIG Manufacturing Index : 58.8 prev.

> AU February Retail Sales : -1.1% exp.

> AU February Trade Balance : 9.95Bio exp.

> CN March Caixin Manufacturing PMI : 51.3 exp.

> EU February German Retail Sales : 2.0% exp.

> EU March Final Manufacturing PMI : 62.4 exp.

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

> OPEC Meetings

> US Unemployment Claims : 678K exp.


With President Biden speaking as I write we are likely to see some fallout from the announcement of another huge stimulus plan, this time focused on building infrastructure and increasing jobs. Currency markets muted thus far, however expecting to see some movement on the futures open. Risk sentiment should be positive, while inflation expectations may see another push higher and may weigh. Expect to see the back and forth between growth/inflation to start to pick up again. With local markets off until next Tuesday, the question as always is whether or not to hold risk leading into the long weekend. See how early trading shakes out, however expect the AUDUSD to trickle back above 0.7600.


Range for the day : 0.7570 – 0.7660


AUD/USD Technicals


Still need to see a break of 0.7660 in the near term for further upside, proving to be tough resistance thus far. The 100DMA at 0.7630 will signal a move back higher, however direction to come from sentiment post-Biden today. See potential for the Dollar to strengthen, however sentiment still the main driver.


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