> AU March AIG Construction Index : 61.8 v. 57.4 prev.
> EU March Final Services PMI : 49.6 v. 48.8 exp.
> UK March Final Services PMI : 56.3 v. 56.8 exp.
> US February Trade Balance : -71.1Bio v. -70.2Bio exp.
> US EIA Crude Oil Inventories : -3.5Mio v. -2.0Mio exp.
Overnight Headlines (BBG)
> The US corporate tax bill is starting to build momentum, while President Biden will need to get this across the line in order to fund his large US$2.25trillion infrastructure plan
> The local vaccine rollout has taken yet another hit, as European regulators have acknowledged that the AstraZeneca vaccine is linked to rare blood clots in those under the age of 30
What you need to know
The AUDUSD continued to struggle above the 0.7660 level, unable to hold during the Asian session as the data docket locally remains light. Local investors remain subdued, with most currency markets trading well within the range ahead of the minutes from the Fed early this morning. Prior to the FOMC minutes the IMF had given global growth a boost as they updated their forecasts higher, as the fiscal support from countries around the world outweighed the virus risks that have spike yet again in recent weeks.
In Europe, the story was around the AstraZeneca vaccine and the link with blood clots that has caused countries around the world to pause the use of the jab. This is a concern for Australia, with the entire program built around this vaccine and the ability to produce it locally. European regulators did say that the pros outweigh the cons, however this may cause some concerns for those looking to get the vaccine.
In the US, the focus remains on the next phase of the recovery by way of the historic infrastructure plan and how the government plans to pay for it. Corporate tax hikes are likely to be the major funding method, while the lobbying begins on both sides in Washington. The Fed’s minutes from their March meeting showed that they are in no rush to change rates, with QE and ZIRP here to stay (for now). Market reaction was a slight move higher in US bond yields, however this likely due to some commentary from Fed members that rising yields are reflecting economic optimism. Commodity currencies were the worst performers of the session, with both the AUD and NZD down 0.7% against a Dollar that was up marginally in DXY terms. The crosses are all looking worse for wear, with AUDJPY and AUDCHF down the most as risk appetite waned later in the session. US equity markets posted yet another all time high on the S&P500, although up 0.15% despite the likelihood of higher taxes. Marginal moves in commodity markets, with Gold down 0.3% and WTI crude up 0.35% as the US EIA report showed a larger draw down on stockpiles than expected.
The Day Ahead
> NZ April Prelim ANZ Business Confidence : -4.1 prev.
> EU February German Factory Orders : 1.3% exp.
> EU ECB Monetary Policy Meeting Accounts
> US Unemployment Claims : 682K exp.
> US Fed Chair Powell to speak (2am AEST)
Not expecting the news overnight to be overly positive for local sentiment, as the continued inability to rollout an effective vaccine strategy continues to weigh on the longer term recovery. Local economic data is very light, with nothing on the docket eyes will be on tomorrow’s financial stability report from the RBA. European monetary policy accounts the highlight overnight, while US unemployment claims and more commentary from Fed Chair Powell will be watched. Don’t see the AUDUSD breaking the range today, although will need to see a major shift for the pair to test 0.7660.
Range for the day : 0.7590 – 0.7640
The pair continues to struggle to gain traction above 0.7660, with a daily close needed above that level to see the momentum shift towards bullish. Support seen at the 0.7600 figure today, with a break bringing the recent low of 0.7532 back into play. Ultra-bears will be targeting the 200DMA at 0.7404.
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