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Global Market Update
The View from Australia

by Craig Killaby | June 2, 2021



> AU Q1 GDP : 1.8% v. 1.5% exp.

> EU April German Retail Sales : -5.5% v. -2.4% exp.


Overnight Headlines (BBG)

> RBA Ast. Gov. Debelle’s speech overnight outlined the actions taken by the RBA to combat the COVID19 pandemic, with little new to add following Tuesday’s statement while noting that the Central Bank will need to see the impact of VIC’s extended lockdown

What you need to know

The Aussie opens up this morning largely unchanged against the Dollar, with the pair being sold off into the London open as Dollar demand took over ahead of tomorrow’s US employment report. Yesterday’s AU Q1 GDP number came in above market estimates with growth up 1.8% in the quarter, although largely priced in following the partials numbers released prior. RBA Ast. Gov. Debelle spoke overnight, in a speech centred around their monetary policy initiatives, however there was little new in the commentary with the focus well and truly on the July meeting, with a speech from the RBA Gov. to follow after the announcement on the 6th July. The AUDUSD touched a low of 0.7716 before moving higher, respecting the recent range of late.


In Europe, the focus is on the recent jitters coming from the UK as the recent rise in COVID19 is worrying some investors as the restrictions are starting to be rolled back. The GBPUSD has traded mixed of late, although able to capitalise on the USD weakness and up marginally on the session. In the US, there seems to be some roadblocks appearing for the Democrats in Congress as they attempt to get their spending packages through. The Biden administration seems to be taking a similar stance to towards China as his predecessor, aiming to keep some of the sanctions in place with slight tweaks. The focus for investors was the Fed’s Beige book, where it showed that prices have picked up across the US with the recovery picking up. The Dollar is largely unchanged in DXY terms, while commodity backed pairs continue have the strongest performances with CAD up 0.3% as the price of WTI crude continues its run higher. Base metals are down on the session with both Iron Ore and Copper seeing 1% losses, while WTI crude is up 1.2% and Gold up 0.4%.


The Day Ahead




> AU April Retail Sales : 1.1% exp.

> AU April Trade Balance : 8.35Bio exp.

> CN May Caixin Services PMI : 56.3 exp.

> EU May Final Services PMI : 55.2 exp.

> UK May Final Services PMI : 61.8 exp.

> US May ADP Non-Farm Employment Change : 645K exp.

> US Weekly Unemployment Claims : 400K exp.

> US May ISM Services PMI : 63.0 exp.

> US EIA Crude Oil Inventories : -1.0Mio exp.

> UK Bank of England Gov. Bailey to speak

> US FOMC Members Bostic and Quarles to speak


Some more local data to come today with the April trade and retail numbers coming out at 11:30am AEST. Not expecting major market moves, and after last night’s speech it is becoming more clear that July is going to be a pivotal month for local policy and the RBA, so range trading is to be expected until then.


Private payrolls numbers will hit the wires from the US this evening, with more Fedspeak on the horizon as the US employment report for May fast approaches. Expecting a range bound local currency yet again, with no reason for the Aussie to break strongly in either direction.


Range for the day : 0.7710 – 0.7780


AUD/USD Technicals


Absolutely no change to the technical picture, the pair supported by the 50/100DMAs, while the upside remains capped at 0.7800/16. Broken record technical picture yet again, need to see a close above/below for a shift.

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