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Global Market Update
The View from Australia

by Craig Killaby | April 28, 2021

Data/Speakers

 

> AU Q1 CPI & Trimmed Mean CPI : 0.6% & 0.3% v. 0.9% & 0.5% exp.

> AU March Goods Trade Balance : 8.50Bio v. 7.54Bio prev.

> EU April German GFK Consumer Climate : -8.8 v. -4.1 exp.

> CA February Core Retail Sales & Retail Sales : 4.8% & 4.8% v. 3.5% & 4.0% exp.

> US EIA Crude Oil Inventories : 0.1Mio v. -0.9Mio exp.

> US FOMC Rate Statement/Decision & Press Conference (4am AEST) : <0.25% v. <0.25% (no change)

 

Overnight Headlines (BBG)

> The Federal Reserve maintained their loose monetary policy stance, with interest rates expected to stay where they are despite the positive steps forward in the recovery

What you need to know

Big swings for the AUDUSD yet again yesterday, as investors were keeping an eye out for the local consumer price index figures ahead of this morning’s Fed decision. Prior to the AU Q1 inflation read, WBC’s economist Bill Evans came out and said that he expects another tranche of QE to come when the current program is completed in September and markets reacted with the AUDUSD lower. Accentuating the move was the soft CPI data, with the core number missing the mark and reiterating to bond and currency markets that low rates and accommodative policy is likely for some time. The AUDUSD was sold off on the print, down as much as 0.4% although it seemed like a knee jerk reaction and slowly drifted higher and recovered up towards 0.7750. 0.7726 was the intraday low, however it was all about the Fed this morning with sideways trading seen until some data from North America hit the wires.

 

Retail figures in Canada exceeded market estimates by a wide margin, boosting the Loonie and seeing the currency march higher against the USD. The Fed was the main event, and Powell did what he could to remain ultra-dovish in his speech. Although the recovery seems to be gaining momentum, the Fed is not going anywhere with their loose policy for now, and UST yields dropped on both the short and long end of the curve. US equity markets finished the day a touch in the red, with commentary on the ‘frothy’ prices in Powell’s press conference sending some jitters.

 

The Dollar struggled on the move lower in yields, down 0.3% in DXY terms and commodity currency pairs seeing the strongest gains against the Greenback. The AUDUSD is back up towards the 0.7800 handle as I write, with the crosses mixed on the day. Commodity markets continue their run, with WTI crude getting a slight boost up near 1% on the weak Buck while Gold and Copper also finished the session higher. Copper and Gold seem to be leading this run higher in commodity markets, with Copper not too far off all time highs.

 

The Day Ahead

 

Data

 

> NZ March Trade Balance : 33Mio exp.

> NZ April Final ANZ Business Confidence : -8.4 prev.

> US President Biden to speak (11am AEST)

> AU Q1 Import Prices : -1.5% exp.

> US Q1 Advance GDP & Price Index : 6.8% & 2.6% exp.

> US Unemployment Claims : 545K exp.

> US March Pending Home Sales : 4.2% exp.

 

Today the focus will be on the US as President Biden speaks to Congress to address the massive infrastructure bill he needs to attempt to get across the line during the Asian session. The data is tier two in Asia today, so we will be keeping an eye on how US futures open following the Fed’s commentary this morning. US GDP is the highlight in terms of data, expected to print near 7% in the quarter while US unemployment claims are still due to print above the 500K level.

 

Range for the day : 0.7740 – 0.7815

 

AUD/USD Technicals

 

No change to the technical picture, with the pair still trading well within its recent range and unable to hold above the 0.7800 handle. We will need to see a close above that level to change momentum, possible today with the weak Dollar footing following the Fed this morning. Breaks targeting the 0.7849 level on the topside, while 0.7691 is the downside target on risk aversion.

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