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Global Market Update
The View from Australia

by Craig Killaby | May 17, 2021

Data/Speakers

 

> JP April PPI : 3.6% v. 3.1% exp.

> CN April Fixed Asset Investment & Industrial Production : 19.9% & 9.8% v. 19.9% & 10.0% exp.

> CN April  Retail Sales & Unemployment Rate : 17.7% & 5.1% v. 25.0% & 5.2% exp.

> CA April Housing Starts : 269K v. 305K exp.

> US May Empire State Manufacturing Index : 24.3 v. 23.9 exp.

 

Overnight Headlines (BBG)

> New York will be lifting the mask mandate this Wednesday, as the US continues to recover quickly from the pandemic as vaccinations soar

What you need to know

Very quiet start to the week for markets with little economic data, most currency pairs moved marginally on the session. The China data came and went with little movement during the Asian session, with the AUDUSD seeing very slight weakness as retail numbers missed the mark by a fairly wide margin. The question of inflation remains the key for all financial markets, with commodity prices continuing to rise on the day despite China’s declaration to quell the rapid price increases. Iron Ore rose another 7.8% from yesterday’s opening prices, supporting sentiment while Copper is up near 1.5% on the day. In currency markets it was the commodity pairs that were initially supported, although the AUD and NZD lagged down 0.4% as commodity markets in the US sold off 0.3% and dragged down risk sentiment. The Loonie was the best performer, up 0.3% against the sliding USD, which is down near 0.2% in DXY terms. WTI crude a factor in the performance of the Loonie, with the price up 1.4% as reopening and shortages across the US place upward pressure on prices. Gold is finally catching a bid on the inflation narrative, up 1.2% as moves away from Bitcoin has seen the price rally.

 

The Day Ahead

 

Data

 

> AU May RBA Monetary Policy Meeting Minutes

> UK May Claimant Count Change & Unemployment Rate : 25.6K & 4.9% exp.

> EU May Flash Employment Change : 0.1% exp.

> US April Building Permits & Housing Starts : 1.77Mio & 1.71Mio exp.

> US May Empire State Manufacturing Index : 23.9 exp.

> UK BOE Gov. Bailey to speak

 

It should be another quiet session locally with the RBA’s minutes from their May meeting the highlight. Not expecting huge moves from the release of the minutes, however with the lack of real data on the docket direction will come from the tone. The on again and off again tone dripping markets continues, with the major question that needs to be answered is whether or not these price increases are transitory, and only time will tell.

 

Range for the day : 0.7740 – 0.7785

 

AUD/USD Technicals

 

Very little change to the dry technical picture, as the pair seems to be consolidating above the 50/100DMAs around 0.7715/21 yet the 0.7800 handle has proved to be a tough level to break. Unlikely to get much major movement unless the minutes from the RBA surprise drastically, with 0.7786 the key on a move back towards 0.7805.

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