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Global Market Update
The View from Australia

by Craig Killaby | April 5, 2021



> AU March AIG Manufacturing Index : 59.9 v. 58.8 prev.

> AU February Retail Sales : -0.8% v. -1.1% exp.

> AU February Trade Balance : 7.53Bio v. 9.95Bio exp.

> CN March Caixin Manufacturing PMI : 50.6 v. 51.3 exp.

> EU February German Retail Sales : 1.2% v. 2.0% exp.

> EU March Final Manufacturing PMI : 62.5 v. 62.4 exp.

> US Unemployment Claims : 719K v. 678K exp.

> US March Non-Farm Payrolls & Average Hourly Earnings : 916K & -0.1% v. 652K & 0.1% exp.

> US March Unemployment Rate : 6.0% v. 6.0% exp.

> US March ISM Services PMI : 63.7 v. 58.3 exp.


Overnight Headlines (BBG)

> US Treasury Sec. Yellen made comments about a global corporate tax, with the focus on bringing the world back together following a period of tariffs and trade spats

> Vaccination programs in the UK and US remain strong, with recoveries moving in the right direction despite new strains of the virus causing havoc across Europe, India and Brazil

What you need to know

With local markets opening back up after the Easter Holiday it will be interesting to see how investors handle the mixed news from the weekend. The AUDUSD looked poised to break through the 0.7500 handle as heavy selling was seen into the weekend, with the Aussie touching a fresh low of 0.7532 as the London volume came in. With most markets closed for Good Friday, the focus was on the strong US March employment report that hit the wires showing that the recovery is well on track as the vaccination program in the US picked up steam. It looked like the chances of sooner than expected rate hikes started to be priced in, although it looks to have been unwound slightly over the weekend.

Overnight last night, it was a strong move higher in US equity markets as ISM services numbers showed that the reopening of the US economy is seeing an uptick in business activity, beating already lofty forecasts. The S&P500 is up a whopping 2.6% from Thursday’s opening prices and nicely above the illustrious 4000 level. With risk appetite tilted to the upside, the AUD performed well, with most of the crosses also looking better than Thursday’s closing levels. The NZD also outperformed, up 1.15% while there looks to be some pressure mounting on the APAC cross. The vaccine program locally has left something to be desired, potentially putting some downward pressure on growth expectations in the region, however the continued run of minimal cases in much of AU and NZ still leaves the region in strong footing. Commodity market moves have shown the flow back into the reflation trade, with Copper up near 4% while Gold also rebounding up 1.2%. WTI crude the laggard, down 0.9% as virus pressures still linger.

The Day Ahead




> AU March ANZ Job Advertisements : 7.2% prev.

> CN March Caixin Services PMI : 52.2 exp.

> AU RBA Cash Rate Decision & Statement : 0.10% exp. (no change)

> EU February Unemployment Rate : 8.1% exp.


The focus today locally will be on the PMI numbers from the Chinese services sector, while the RBA is on tap this afternoon. Not expecting much movement from the Reserve Bank in their latest decision, likely to flag the potential headwinds from the removal of the Jobkeeper wage subsidy at the end of March. Local equity markets likely to have a strong performance, with risk appetite leaving the door open for another push up towards 0.7700 as the real money still remains long AUD.


Range for the day : 0.7620 – 0.7680


AUD/USD Technicals


Sharp rebound for the pair following the heavy selloff on Thursday, back within the range between the 50/100DMA and looking poised for another run higher. Will need to see 0.7660 broken and held today to provide a clear change in direction, with 0.7717 (50DMA) the target on moves higher. The Thursday low of 0.7532 will be the target on a heavy selloff, although will need to see a significant uptick in negative virus news for this to be back on the table.

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