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Global Market Update
The View from Australia

by Craig Killaby | April 8, 2021

Data/Speakers

 

> NZ April Prelim ANZ Business Confidence : -8.4 v. -4.1 prev.

> EU February German Factory Orders : 1.2% v. 1.3% exp.

> US Unemployment Claims : 744K v. 682K exp.

 

Overnight Headlines (BBG)

> The local vaccine rollout continues to struggle, while the blood clotting issue from the AstraZeneca vaccine has caused the government to recommend no one under the age of 50 receive the vaccine, a huge part of the population

> US Fed Chair Powell continues to downplay inflation risks, commenting that the Fed would take action if there was sustained inflationary pressures

What you need to know

A very uneventful Asian session, with a light data docket most markets traded sideways for the majority of the day. The GBPUSD lead the moves higher during late Asia, with the Aussie following the move and slowly trickling higher as the European volume started to come into play. Late in the evening, the local vaccine rollout stalled yet again as the government changed their recommendations on the vaccine with those under the age of 50 likely to be given another choice. The problem is, Australia is going to struggle to retain the amount of doses required to vaccinate the population in the near term, so expect borders to stay closed for the remainder of the year. The NZ/AU travel bubble is already seeing some jitters before it starts with a border staff member testing positive in NZ, with those expecting to book a trip across the Tasman likely to do so with a high risk.

In Europe, inflation seems to be picking up across the region as the cost of consumer goods rose in what is likely to be the norm in coming months. The ECB’s meeting minutes showed that there was some back and forth between members on the pace of the PEPP program, while the biggest concern remains the rising COVID19 cases and the lack of vaccinations across the member countries. US markets relatively subdued, with investors awaiting commentary from the Chair of the Fed. Fed Chairman Powell commented that he didn’t believe inflation is going to be a real risk, with yields falling sharply across the curve and seeing US equity markets post further gains. The Dollar is down 0.4% as the correction continues, with 92.00 fast approaching on the DXY. With risk appetite turning positive, both the AUD and NZD are up on the session with the Kiwi outperforming. Lots of green in commodity markets, with Gold the biggest winner up over 1%, while WTI crude is up 0.6%. US job numbers missed the mark, with unemployment claims gaining in the week. The next headlines from the US will all be about Biden’s plan to rebuild America, with the help from a sharp increase in taxes.

The Day Ahead

 

Data

 

> AU March AIG Services Index : 55.8 prev.

> AU RBA Financial Stability Review

> CN March CPI & PPI : 0.3% & 3.6% exp.

> EU February German Industrial Production & Trade Balance : 1.6% & 23.4Bio exp.

> CA March Employment Change & Unemployment Rate : 101.5K & 8.0% exp.

> US March Core PPI & H/line PPI : 0.2% & 0.5% exp.

 

The RBA’s financial stability review will be the day’s highlight followed by both consumer and producer inflation numbers out of China. Keeping a close eye on producer inflation numbers, with a continued move higher in producer prices likely to ignite yet another bout of inflation fears, although that seems to be a problem of last month. No reason to really break the range yet again, eyes looking ahead to next week’s job figures although we will need to wait until May to see how the removal of Jobkeeper has impacted the labour market.

 

Range for the day : 0.7610 – 0.7670

 

AUD/USD Technicals

 

Range bound yet again, and its been a tight range for the week with the sparse data docket a factor. 50/100DMA range remains the key, with a break of 0.7600 needed to see a potential test of the fresh low of 0.7532. Not expecting that today, while upside remains capped by the elusive 0.7660 level, which has been a tough nut to crack.

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