News & Resources

Market Analysis

Latest Insights
Press Releases
Latest Insights

Global Market Update
The View from Australia

by Craig Killaby | June 1, 2021

Data/Speakers

 

> AU April Building Approvals : -8.6% v. -9.9% exp.

> AU Q1 Company Operating Profits : -0.3% v. 3.6% exp.

> AU Q1 Current Account : 18.3Bio v. 17.8Bio exp.

> CN May Caixin Manufacturing PMI : 52.0 v. 52.1 exp.

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

> EU May H/Line CPI & Core CPI Flash Estimate : 2.0% & 0.9% v. 1.9% & 0.9% exp.

> CA March GDP : 1.1% v. 1.0% exp.

> US May Final Manufacturing PMI : 62.1 v. 61.5 exp.

> US May ISM Manufacturing PMI : 61.2 v. 60.8 exp.

 

Overnight Headlines (BBG)

> The GBPUSD was the biggest story, with reports that the UK is seeing a rise in a new COVID19 variant while the country reported its first day with zero daily deaths since the outbreak began

What you need to know

Although we still sit well within the recent range above the 0.7700 handle for the AUDUSD, the pair saw some whippy moves as the GDP forecasts were edged higher while the RBA maintained its dovish tone in the afternoon. The Aussie looked poised to make another run at 0.7800 following the GDP partials and the at expectations Chinese PMI figures, however bulls were stopped in their tracks later in the session as the RBA chose to take a wait and see approach rather than signal policy tightening like the BOC and RBNZ. Immediate reaction post RBA was a selloff in the pair, with cross selling dominating the move lower. The AUDUSD touched an intraday low of 0.7734 before recovering in early London with the GBPUSD touching the highest level in three years.

 

The story in the UK is mixed, with the recovery moving in the right direction following the strong vaccination effort worries emerged that a new COVID19 variant has put it all at risk. GBPUSD retreated off its highs, and down as much as 0.7% on the session. During the North American session it was commodities that saw the biggest movement, with WTI crude up another 1.5% and dragging crude backed currency pairs higher with CAD and NOK up on the day. UST yields are up following the US holiday, with the short end leading the move. Iron Ore continues its recovery after the China driven selloff, up another 2% and taking aim at the US$200/tonne level yet again. Gold took a slight hit, although still over US$1900/oz but down 0.35% from yesterday’s opening prices.

 

The Day Ahead

 

Data

 

> AU Q1 GDP : 1.5% exp.

> EU April German Retail Sales : -2.4% exp.

> AU RBA Dep. Gov. Debelle to speak

> US FOMC Members Bostic and Evans to speak

 

The data continues again today, with the Q1 growth numbers giving local investors something to chew on at 11:30am AEST. Potential for an upside beat on the 1.5% consensus forecast is definitely there, providing an interesting scenario for the RBA in their upcoming meeting. Markets will get some commentary RBA Ast. Gov. Kent this evening, an evening speaking engagement from the local Central Bank. Commentary from the US Fed will be important as they may start to elude to what will come from the Fed Chair on Friday, although the major risk ahead remains the May jobs report as the US recovery is eyed.

 

Range for the day : 0.7720 – 0.7780

 

AUD/USD Technicals

 

The pair seems to be faded towards the 0.7800 handle, with selling pressure seen around the figure. No real change to the technical picture, however following the RBA’s policy decision the upside risks seem to be limited on the dovish tone. 0.7813 the key, with a close above 0.7780 needed. While support at the 50/100DMAs ahead of the recent low sub 0.7700.

“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.