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Global Market Update
The View from Australia

by Craig Killaby | April 19, 2021

Data/Speakers

 

> JP February Revised Industrial Production : -1.3% v. -2.1% exp.

> EU February Currency Account : 25.9Bio v. 31.2Bio exp.

> CA March Housing Starts : 335K v. 254K exp.

 

Overnight Headlines (BBG)

> UK re-opening continues to be a major story as the country seems to be on track for an open summer, while adding India to the no-fly list with COVID19 variant cases skyrocketing

What you need to know

Another uneventful session in Asia for financial markets as the macro lull continues with a real lack of catalysts seeing local currency pairs trade in a tight range for the majority of the session. There was a brief selloff in the AUDUSD in early trading, finding support around 0.7705 before trickling higher throughout the day and rallying sharply into the London open. GBPUSD the driver of the USD weakness into Europe, with the continued good news on the re-opening plan sending the GBP up against most of its rivals and up as much as 1.3% against the struggling USD. The commentary from the PBOC over the weekend regarding the digital Yuan looked to have seen some demand back into the Buck in early doors, although unable to hold on to further gains as risk sentiment turned positive and saw commodities perform strongly throughout the afternoon and overnight.

Iron Ore and Copper two of the major stories, with both up over 3% while Copper near 4% as the commentary expected from US President Biden on the environmental initiatives this week seems to have boosted demand for Copper. The Dollar is struggling in DXY terms, down towards 91.00 and off 0.5% on the session. Goldman Sach’s upbeat forecasts on the EUR also a factor in the strong performance overnight, up above 1.2000 and as much as 0.88% for the day. Equity markets had a soft start to the week, with the ASX closing flat while the S&P500 is down a touch over 0.5% as I write. Gold the laggard in the commodities space, down 0.3% while Bitcoin is also struggling as blackouts across China weigh on mining and down near 10%.

The Day Ahead

 

Data

 

> AU April RBA Meeting Minutes

> EU March German PPI : 0.6% exp.

> UK March Claimant Count Change & Average Earnings Index : 24.5 & 4.7% exp.

> UK March Unemployment Rate : 5.0% exp.

 

The focus today will be on the local RBA meeting minutes, and with the AUDUSD opening up only a touch below resistance at 0.7760, the chances of another move back up towards the overnight high of 0.7785 seems more likely than not as optimism remains strong on the local recovery.

 

Overnight UK jobs figures could boost the GBPUSD even further, with the continued progress on the vaccination rollout and the re-opening driving the momentum higher in the Sterling. Eyes on tomorrow morning’s CPI numbers, as local investors get a peek into what inflation may be looking like APAC ahead of next Wednesday’s local read.

 

Range for the day : 0.7730 – 0.7795

 

AUD/USD Technicals

 

Not expecting a major break today in either direction as markets really need to see a catalyst for a move back up towards 0.7849. the 100DMA still sitting at 0.7675 is the target on a sustained move lower, likely need to see a big pullback in risk sentiment to see that hit today. Intraday resistance at the overnight high of 0.7785, with 0.7800 handle within shouting distance.

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