News & Resources

Market Analysis

Latest Insights
Press Releases
Latest Insights

Global Market Update
The View from Australia

by Craig Killaby | May 9, 2021

Data/Speakers

 

> CN April Caixin Services PMI : 56.3 v. 54.2 exp.

> NZ Q2 Inflation Expectations : 2.05% v. 1.89% prev.

> EU March German Industrial Production : 2.5% v. 2.1% exp.

> CA April Employment Change & Unemployment Rate : -207.1K & 8.1% v. -160.5K & 7.8% exp.

> US April Non-Farm Employment Change & Unemployment Rate : 266K & 6.1% v. 990K & 5.8% exp.

> US April Average Hourly Earnings : 0.7% v. 0.0% exp.

 

Weekend Headlines (BBG)

> US employment missed expectations by a wide margin, sparking political debate as to whether or not fiscal stimulus is slowing down the labour market rebound

What you need to know

Interesting end to the week for financial markets, as the US employment figures sent shockwaves throughout markets as they missed expectations by a staggering margin. Prior to Friday overnight data the RBA’s SOMP did little to change the local currency as they believed that the AUD is well within fundamentals while reiterating no rate hikes for three years. Sideways trading was seen below the 0.7800 handle, as the currency traded in its multi week range ahead of employment figures from the US and Canada overnight. Canada’s lockdowns and poor vaccine rollout is plaguing the labour markets, with over 200K jobs lost in the month of April with widespread lockdowns seen while the unemployment rate ticked up back above 8%.

 

The real focus was on the US, with investors positioned for a strong report that was meant to show the quick rebound that the vaccinations are having on the US economy, with nearly 1mio jobs expected to be added in April. That was not to be, with 266K jobs added the official figure while the unemployment rate ticked up back over 6%. The rebound is not happening as quickly as hoped, with the back to work moves not having the desired impact on the labour market as yet. The Dollar was smashed on the release, with the DXY down 0.7% while UST yields slid. The Dollar had its worst session since September, with nearly every major up sharply against the Greenback. The AUDUSD hit a high of 0.7862 in the aftermath, and only a few ticks off as I write this morning. US equity markets surprisingly were able to gain with the S&P500 up 0.75% despite the jobs miss. While the story in commodity markets continues to be the staggering moves in metals with Iron Ore up well over US$200/tonne, and Copper surging yet again up 3%.

 

The Day Ahead

 

Data

 

> AU March Retail Sales : 1.4% exp.

> AU April NAB Business Confidence : 15 prev.

> US FOMC Member Evans to speak

 

With the range broken Friday this will be an interesting week for the AUDUSD, back up towards 0.7900 the focus will be on commentary from the US Fed with the local data docket very light. Also hitting the wires tomorrow night will be the AU budget, and with the government pledging to spend until the employment recovery is complete, expecting it to be AUD supportive. Commodity markets are back in the limelight, and as they continue to surge inflation worries are likely to take centre stage. The weaker Dollar theme that ended last week seems to have carried through, with the chance of a break higher towards 0.7900 a real chance.

 

Range for the day : 0.7840 – 0.7915

 

AUD/USD Technicals

 

Finally a break, and it came to the upside as the Buck selloff the catalyst. With the pair opening up testing the intraday high from Friday at 0.7862, the likelihood of a move towards 0.7900 is strong today. Profit taking may see a drift back towards 0.7835, with 0.7795 the target on moves lower.

“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.