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Global Market Update
The View from Australia

by Craig Killaby | April 26, 2021

Data/Speakers

 

> EU April German IFO Business Climate : 96.8 v. 97.8 exp.

> US March Core Durable Goods Orders & Durable Goods Orders : 1.6% & 0.5% v. 1.6% & 2.5% exp.

 

Overnight Headlines (BBG)

> US President Biden is expected to give a boost to unions as he is expected to sign an executive order promoting the organization of labour unions

> The US is sending their AstraZeneca vaccine doses to India as the country is in the grips of one of the worst outbreaks of COVID19 the world has seen

What you need to know

Risk on is the tone to kick off the week ahead of the Fed’s latest meeting, with commodities leading the charge higher with Copper hitting the highest levels since 2011 and Iron Ore surging yet again. The move higher in the AUDUSD was steady throughout the day, with the expectations of strong data and a very dovish Federal Reserve seeing commodity futures surge and drag commodity FX along with it. The AUDUSD was able to break above 0.7800 yet again, with an intraday high of 0.7814 seen overnight. The NZDUSD was also higher, up 0.6% while the Loonie moved to the strongest levels in over a month. All the AUD crosses are looking much better, with the risk pairs of AUDJPY and AUDCHF the best performers of the session on the move into risk assets.

 

Equity markets overseas were able to push to yet another all time high on the S&P500, and up 0.2% to close the session. UST yields moved higher, however still a ways off the high levels seen in March and easing the inflation fears for the time being. Gold, Iron Ore and Copper all higher on the day with the latter having the strongest day up over 2.4%. WTI crude lagging behind as the concerns of demand in India weighing on the price, as the country battles the pandemic in a concerning fashion.

 

The Day Ahead

 

Data

 

> JP BOJ Monetary Policy Statement & Report : -0.10% exp. (no change)

> US April CB Consumer Confidence : 113.1 exp.

> US April Richmond Manufacturing Index : 22 exp.

 

Expecting a well and truly risk-on session today, with the strong lead in from Wall Street overnight likely to see the AUDUSD boost through to fresh highs. The Bank of Japan is unlikely to change policy or move currency markets in a real way today with the focus on tomorrow’s AU CPI numbers locally ahead of the very important Fed on Thursday. US President Biden is expected to address joint Congress for the first time this week, with infrastructure spending and taxation likely in the comments. Could be a push higher today, with eyes on equity and commodity markets for the signals.

 

Range for the day : 0.7760 – 0.7840

 

AUD/USD Technicals

 

Moves higher will be targeting the March high of 0.7849 today, while the recent highs of 0.7814/16 may be vulnerable in early trading. Support likely at 0.7760, a level that has see some consolidation for the past two weeks and likely to have built a nice base. The Dollar seems to be breaking down, with another session close below 91.00 on the DXY a bearish signal.

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