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Global Market Update
The View from Australia

by Craig Killaby | April 6, 2021

Data/Speakers

 

> AU March ANZ Job Advertisements : 7.4% v. 8.8% revised prev.

> CN March Caixin Services PMI : 54.3 v. 52.2 exp.

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

> EU February Unemployment Rate : 8.3% v. 8.1% exp.

 

Overnight Headlines (BBG)

> US President Biden announced that as of the 19th April all US adults will be eligible for a vaccine, boosting risk sentiment in early trading

> The much anticipated two way travel bubble is set to open on the 19th April, with quarantine free travel between the two countries needed to boost the struggling tourism sector following strict border closures

What you need to know

Busy session for the first full day back following the holiday with the RBA keeping policy unchanged while announcements from NZ and China moved the needle. The much anticipated Trans-Tasman travel bubble is set to open up on the 19th April, with Australians able to travel quarantine free to NZ from the date. The move should boost a struggling tourism sector, although PM Morrison threw water on the idea of this being the start of more travel bubbles from AU. China data and commentary was the major market mover of the session, with the Caixin services PMI numbers exceeding market estimates and flagging that the reopening of the economy is on track following the reopening. The announcement following the data put a pin in risk sentiment for the remainder of the Asian session, with China telling their major banks to cut back on loans to limit the credit risk in the region. Later in the afternoon the RBA kept their policy and rates unchanged, as they continue to take a wait and see approach as they watch to see what the removal of fiscal stimulus does to the economy. The RBA flagged potential risks from a rallying housing market, although unlikely to see any major shifts as long as lending standards remain high.

The AUDUSD slid into to European session, touching a low of 0.7606 before rallying throughout the US session. There seems to be another staggering wave of the COVID19 pandemic, with additional strains causing major concern in some regions. The Dollar is down in DXY terms, as risk appetite turned positive overnight as yields around the world eased off the highs as investors seem to be unwinding their Fed hike bets. The UST10y yield now hovering back around the 1.65% level as inflation fears seem to be drifting for the time being following the Biden infrastructure plan announcement and the strong US jobs report. US equities down a touch on the session with the S&P500 down 0.1% as corporate tax hikes become more likely. Gold and WTI crude up in the commodities sectors, with WTI crude up near 1.2%.

The Day Ahead

 

Data

 

> AU March AIG Construction Index : 57.4 prev.

> EU March Final Services PMI : 48.8 exp.

> UK March Final Services PMI : 56.8 exp.

> US February Trade Balance : -70.2Bio exp.

> US EIA Crude Oil Inventories : -2.0Mio exp.

> US FOMC Members Evans and Barkin to speak

> US FOMC Meeting Minutes (4am Thursday AEST)

 

The Dollar seems to be correcting back below key levels on the DXY, with the AUD looking poised to make another run higher in the near term. Major headwind is the significant rise in COVID19 cases in some regions, and new strains causing concerns that are more deadly in younger people. Data is light today in Asia, so will be keeping an eye on yields ahead of the FOMC meeting minutes tomorrow morning with any negative headlines on COVID19 also traded on.

 

Range for the day : 0.7620 – 0.7715

 

AUD/USD Technicals

 

Expecting to see a range start to build with the pair sitting within the 100/50 DMAs, opening up this morning above key support at 0.7660. With little to shift direction, will need to see the 50DMA at 0.7717 broken for a key signal on a move higher although that could happen quickly with RM still net long AUD.

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