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Global Market Update
The View from Australia

by Craig Killaby | April 22, 2021



> AU Q1 NAB Quarterly Business Confidence : 17 v. 14 prev.

> EU ECB Monetary Policy Statement & Press Conference : 0.00% v. 0.00% exp.

> US Unemployment Claims : 547K v. 607K exp.

> EU March Consumer Confidence : -8 v. -11 exp.

> US March Existing Home Sales : 6.01Mio v. 6.18Mio exp.


Overnight Headlines (BBG)

> Russia stated that they will be pulling forces away from the Ukrainian boarder, a positive sign for the easing of tensions in the region for the time being

> US President Biden has proposed substantially increasing the capital gains tax for wealthy Americans, potentially as high as 43.4%

What you need to know

The Aussie is back down towards the 0.7700 handle in early trading today, with the negative virus news out of India putting a slight dent in sentiment at the end of yesterday’s session and Biden’s tax proposals weighing on equity markets across the Pacific. The data docket was light in Asia, with the NAB quarterly business confidence numbers coming in better than expectations as the recovery remains well on track locally. The removal of Jobkeeper doesn’t seem to be having a negative impact as yet, a solid sign that the economy is poised for a strong second half of the year. Intraday high for the AUDUSD was 0.7765, making a few attempts to break higher although unsuccessful for the day.


As it became very early Europe, India posted over 300K new cases of COVID19 and shattering the US’s daily record. Potential to contain the spread of the virus in India is likely to be very difficult, and as long as emerging markets are still struggling the world will need to be wary. Overnight, the ECB kept their policy unchanged, ramping up their bond purchases and maintaining the program will continue into March 2022. EURUSD a touch softer on the session, back down towards 1.2000 with no sign of a taper. GBPUSD off the recent highs above 1.4000, and sitting at the 1.3840 level as I write.


In the US, upbeat data remains the story with weekly unemployment claims reaching a pandemic low as the vaccination effort drives back to work. President Biden seems to be poised to tax wealthy Americans in his recent tax initiatives, with Wall Street being sold off sharply with the potential of capital gains tax increases to as much as 43.4%. The S&P500 is off 0.9% on the news, while the Dollar firmed a touch and UST yields fell further. Gold and Copper the laggards in the commodities space, while WTI crude saw a 1% gain.


The Day Ahead




> AU April Flash Manufacturing & Services PMI : 56.8 & 55.5 exp.

> UK March Retail Sales : 1.5% exp.

> EU April Flash Manufacturing & Services PMI : 62.0 & 49.1 exp.

> UK April Flash Manufacturing & Services PMI : 59.0 & 58.9 exp.

> US April Flash Manufacturing & Services PMI : 60.0 & 61.6 exp.


Flash PMI numbers will kick it off locally, however considering the poor lead in equities are likely to get from Wall Street the chances of a rally remain limited for now. The rise of COVID19 cases is something to monitor on the global growth rebound, with India’s numbers now of major concern. More PMI numbers out of Europe and the US tonight, with more good news from the US recovery likely to see some positive risk appetite in the face of Biden’s large tax hikes.


Range for the day : 0.7690 – 0.7760


AUD/USD Technicals


No real change to the technical picture, with the pair well and truly range bound with little data ahead today. Need to see the 0.7760 level broken and held to bring some bullish momentum back on the table. The weekly close will be very important with the busy data week next week, with a close above the 50DMA at 0.7722 a positive sign.

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