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Global Market Update
The View from Australia

by Craig Killaby | May 16, 2021

Data/Speakers

 

> NZ April Business NZ Manufacturing Index : 58.4 v. 63.6 prev.

> CA March Manufacturing Sales : 3.5% v. 3.5% exp.

> US April Retail Sales & Core Retail Sales : 0.0% & -0.8% v. 1.0% & 0.5% exp.

> US April Industrial Production : 0.7% v. 0.9% exp.

> US May Prelim UoM Consumer Sentiment : 82.8 v. 90.2 exp.

> US May Prelim UoM Inflation Expectations : 4.6% v. 3.4% prev.

 

Weekend Headlines (BBG)

> China has stepped up efforts to put a halt to the surge in commodities, vowing to stabilise the price increases as fears of inflationary pressures takes over

What you need to know

With a lack of data during the Asian session Friday, investors chose to sit on their hands and await the US retail and consumer sentiment numbers to hit the wires in the US session. Surprisingly, both missed market estimates by a wide margin and saw the USD sold off on the back of the print. Rising inflation expectations a factor in the consumer sentiment figures, as the reality of higher prices has dented sentiment despite the reopening economy. Price action was a selloff in the USD, down 0.45% in DXY terms as UST yields dropped on the data print. Strong move higher in the AUD and NZD, with the Aussie shrugging off the move lower in Iron ore as China has vowed to stem the recent price surge. The AUD crosses are mostly higher, although tempered by most of the majors up sharply against the USD. US equity markets unfazed by the poor data, with the S&P500 up 1.5% to close out the week. Big moves in commodity markets, with Iron Ore down over 4% on the day while Copper also saw some weakness down 0.8%. Oil and Natural Gas the biggest winners as the US gas shortages sees a move higher in prices, with WTI crude up 2.5%.

 

The Day Ahead

 

Data

 

> JP April PPI : 3.1% exp.

> CN April Fixed Asset Investment & Industrial Production : 19.9% & 10.0% exp.

> CN April  Retail Sales & Unemployment Rate : 25.0% & 5.2% exp.

> CA April Housing Starts : 305K exp.

> US May Empire State Manufacturing Index : 23.9 exp.

> US FOMC Members Clarida and Bostic to speak

 

Today’s data will be focused on the Chinese data dump around mid-day, with the direction for the AUDUSD dictated by the print. Not expecting huge moves today unless the data surprises in either direction, with risks tilted to the downside on the inflation jitters. US Fedspeak has become very important, with the recent inflation jitters hitting the mainstream insights into tightening risks the key.

 

Range for the day : 0.7720 – 0.7805

 

AUD/USD Technicals

 

With the pair back up towards the 0.7800 handle this morning, that level will be the key as the Dollar weakness takes over. Eyeing support at 0.7754 intraday, with 0.7720 important on sustained risk aversion.

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