News & Resources

Market Analysis

Latest Insights
Press Releases
Latest Insights

Global Market Update
The View from Australia

by Craig Killaby | May 4, 2021

Data/Speakers

 

> AU March Trade Balance : 5.57Bio v. 8.25Bio exp.

> AU RBA Rate Statement & Decision : 0.10% v. 0.10% exp. (no change)

> UK April Final Manufacturing PMI : 60.9 v. 60.7 exp.

> CA March Trade Balance : -1.1Bio v. 0.5Bio exp.

> US March Trade Balance : -74.4Bio v. -74.5Bio exp.

 

Overnight Headlines (BBG)

> US Treasury Secretary Yellen commented on a potential rise in interest rates to prevent an overheating of the economy, although a timeframe was not specified

What you need to know

There was finally some movement across FX markets overnight, with comments from US Treasury Secretary Janet Yellen on potential rate rises and inflationary pressures igniting a bout a risk aversion. Yesterday’s Asian session was still plagued by the Japanese and Chinese holidays, while the onshore data showed imports dropping significantly in the month of March. The AU trade surplus shrank to below 6Bio, seeing a slow drift lower in the AUDUSD shortly thereafter. The RBA kept policy unchanged, while also kicking the can down the road until the July meeting to make a decision on the yield curve target. It is quite clear that the RBA wants to see more data before policy is tweaked, with the AUDUSD spiking in the aftermath and drifting lower into the London open.

 

The main price action overnight was dictated by inflation fears as supply bottlenecks and commentary drove the move away from risk assets. The AUD performed poorly, down 0.7% at the time of writing and touching an intraday low of 0.7675 overnight. The Yellen commentary spooked investors, although she later clarified that she was neither recommending or predicting a rate hike, US equity markets had a tough session with the S&P500 down 0.7%. The Dollar is up 0.3% in DXY terms, a result of haven buying as UST yields slid on the risk-off sentiment. There seems to be no stopping commodities, with WTI crude up 2.6% while both Iron Ore and Copper edging out gains. Next up for the space is the US multi-trillion Dollar infrastructure plan as the Biden administration attempts to pass it through Congress.

 

The Day Ahead

 

Data

 

> NZ Q1 Employment Change & Unemployment Rate : 0.3% & 4.9% exp.

> AU March Building Approvals : 2.9% exp.

> EU April Final Services PMI : 50.3 exp.

> EU Economic Forecasts

> US April ADP Non-Farm Employment Change : 872K exp.

> US April ISM Services PMI : 64.2 exp.

> US FOMC Member Evans to speak

> US EIA Crude Oil Inventories : -1.9Mio exp.

 

NZ employment figures for Q1 this morning will be the APAC data highlight, while local building approvals provides some tier two data in Australia. The commentary from Janet Yellen will likely reverberate across the local session, as inflation fears start to slowly perk back up with equities the biggest causality on the price increase fears. Expecting a soft session for risk sentiment, with the poor lead in from Wall Street likely to see local markets open in the red as the rotation away from growth ramps up again.

 

Range for the day : 0.7660 – 0.7730

 

AUD/USD Technicals

 

The pair seems to be at a crossroads with the 100/50DMA converging at the 0.7708 level this morning. The bearish momentum is starting to build, with equity markets the clear barometer the chances of a break back towards the intraday low of 0.7675 today cant be ruled out.

“Cambridge Global Payments” is a trade name, which in this document refers specifically to one or more of these legal entities: Cambridge Mercantile Corp., Cambridge Mercantile Corp. (U.S.A.), Cambridge Mercantile Corp. (Nevada), Cambridge Mercantile (Australia) Pty. Ltd.

Cambridge Global Payments (“Cambridge”) provides this document as general market information subject to: Cambridge’s copyright, and all contract terms in place, if any, between you and the Cambridge entity you have contracted with. This document is based on sources Cambridge considers reliable, but without independent verification. Cambridge makes no guarantee of its accuracy or completeness. Cambridge is not responsible for any errors in or related to the document, or for damages arising out of any person’s reliance upon this information. All charts or graphs are from publicly available sources or proprietary data. The information in this document is subject to sudden change without notice.

Cambridge may sell to you and/or buy from you foreign exchange instruments (including spot and/or derivative transactions; both kinds are here called “FXI”s) covered by Cambridge on a principal basis.

This document is NOT: 1) Advice of any kind, or 2) Approved or reviewed by any regulatory authority, or 3) An offer to sell or a solicitation of an offer to buy any FXIs, or to participate in any trading strategy.

Before acting on this document, you must consider the appropriateness of the information, based on your objectives, needs and finances. For advice, you must contact someone independent of Cambridge.

Certain FXIs mentioned in this document may be ineligible for sale in some locations, and/or unsuitable for you. Contact your Cambridge representative for further information regarding product availability/suitability before you enter into any FXI contract.

FXIs are volatile and may cause losses. Past performance of a FXI product cannot be relied on to determine future performance.

This document is intended only for persons in Canada, the US, and Australia. This document is not intended for persons in the UK or elsewhere in the EEA. In Australia, this publication has been distributed by Cambridge Mercantile (Australia) Pty. Ltd. (ABN 85 126 642 448, AFSL 351278); for the general information of its customers (as defined in the Corporations Act 2001). This entity makes no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law.

Fees may be earned by Cambridge (and its agents) in respect of any business transacted with Cambridge.

The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact the applicable Cambridge if you wish to use Cambridge services to enter a transaction involving any instrument mentioned in this document.

© Copyright 2018, Cambridge Mercantile Corp., ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Cambridge Mercantile Corp. See www.cambridgefx.com for contact details.