> AU April AIG Manufacturing Index : 61.7 v. 59.9 prev.
> AU April MI Inflation Gauge : 0.4% v. 0.4% prev.
> AU April ANZ Job Advertisements : 4.7% v. 7.8% revised prev.
> EU March German Retail Sales : 7.7% v. 2.9% exp.
> EU April Final Manufacturing PMI : 62.9 v. 63.3 exp.
> US April ISM Manufacturing PMI : 60.7 v. 65.0 exp.
Overnight Headlines (BBG)
> Key Fed decision makers Williams and Powell both reiterated that there is still a ways to go in the recovery, with no rate increases in the near future
> Pfizer is planning to start exporting their vaccine as the US rollout leads the world, with countries desperately needing the shots likely to be prioritised in the move
What you need to know
With holidays in Japan, China and the UK it was a very quiet start to the trading week in Asia. The Dollar pared gains throughout the session, with the AUDUSD slowly drifting higher and opening up this morning around the 0.7760 level. House prices continued to move higher in April, although less than previous months in Australia. While inflation seemed to be the major concern across market commentary as commodity prices continue to surge as economies open up and manufacturing ramps up.
Overnight in the US, the Biden administration put support around Pfizer exporting some of their vaccines, as the US remains well on track to hit critical mass vaccinations by the summer. European retail numbers from Germany well exceeded street estimates, a good sign that the economy is on the right track. The data from both the EU and US PMI numbers missed estimates, although there is still considerable expansion of the sector. Equity markets both locally and over in the US edged out marginal gains, with the S&P500 closing the session near 0.3% in the black.
Currency markets saw the Dollar down 0.3% in DXY terms, while commodity based pairs the biggest winners with the AUD,NZD and CAD all up on the session. AUD crosses looking better, however most pairs still well within the recent range. Lower UST yields a factor in the move lower, as inflation fears remained the Fed Chair and Vice-Chair poured water on the idea of moving forward any rate hikes. Commodity markets remain the key story as the reflation trade gains momentum, with Copper, WTI crude and Gold all up to kick off the week.
The Day Ahead
> AU March Trade Balance : 8.25Bio exp.
> AU RBA Rate Statement & Decision : 0.10% exp.
> UK April Final Manufacturing PMI : 60.7 exp.
> CA March Trade Balance : 0.5Bio exp.
> US March Trade Balance : -74.5Bio exp.
> JP/CN Bank Holidays
Focus will be onshore today with the RBA set to provide their most recent policy decision, unlikely to be changed while the tenor of the target on YCC in focus. Expecting sideways trading leading into the meeting, however not expecting a huge move in the aftermath unless there is a major surprise in the statement. China and Japan still off on holidays, which may make for choppy trading conditions and accentuate the moves.
Range for the day : 0.7720 – 0.7785
The range continues, as the pair is unable to break in either direction the broken record of technical remains in place. 0.7816 is the upside level that needs to be breached, while ultimate downside at 0.7691. Not expecting this to change yet again, with eyes ahead to Friday’s US NFP if the RBA holds the line.
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