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Global Market Update
The View from Australia

by Craig Killaby | June 3, 2021



> AU April Retail Sales : 1.1% v. 1.1% exp.

> AU April Trade Balance : 8.03Bio v. 8.35Bio exp.

> CN May Caixin Services PMI : 55.1 v. 56.3 exp.

> EU May Final Services PMI : 55.2 v. 55.2 exp.

> UK May Final Services PMI : 62.9 v. 61.8 exp.

> US May ADP Non-Farm Employment Change : 978K v. 645K exp.

> US Weekly Unemployment Claims : 385K v. 400K exp.

> US May ISM Services PMI : 64.0 v. 63.0 exp.

> US EIA Crude Oil Inventories : -5.1Mio v. -1.0Mio exp.


Overnight Headlines (BBG)

> US private payroll numbers posted the strongest gains since the outbreak of the pandemic, while weekly unemployment claims also came in below estimates as the US economy rebounds post-vaccinations

> US President Biden put forward a proposal to Congress, which would see the corporate tax rate at 15% as the administration does what they can to appeal to their Republican counterparts to pass their important infrastructure plan

What you need to know

The Dollar came back overnight, as the US economic data showed that the recovery is well and truly underway as investors reposition for potential earlier than expected tapering discussions from the US Fed. The data in Asia yesterday was at expectations with the Retail and Trade numbers locally providing little movement for the local currency, although slowly drifting lower heading into the London session. The AUDUSD continued to be range bound until the US released their ADP payroll and unemployment data, which showed massive gains in added jobs and a significant drop in unemployment benefits.


The market reaction was a swift move higher in the Dollar, with the DXY up 0.65% and high beta currency pairs impacted the most in the move. AUDUSD and NZDUSD slid sharply, both down near 1.3% form yesterday’s opening prices. Also hitting the wires was news that the Biden administration is looking at other ways to fund the massive infrastructure package, as the negotiations in Congress continue. US equity markets took a hit, with the S&P500 down 0.35% as the Fed taper worries took over. Sharp moves lower in the commodities space, with the stronger Dollar seeing Copper, and Gold both down sharply. WTI crude continues its resilience, up 0.25% on the day.


The Day Ahead




> JP April Household Spending : 8.6% exp.

> NZ RBNZ Gov. Orr to speak

> EU ECB President Lagarde to speak

> US Fed Chair Powell to speak

> CA May Employment Change & Unemployment Rate : -23.5K & 8.2% exp.

> US May Average Hourly Earnings : 0.2% exp.

> US May Non-Farm Employment Change & Unemployment Rate : 645K & 5.9% exp.

> CA May Ivey PMI : 62.3 exp.


Opening up the last trading day of the week sub 0.7650 is likely to be surprising to many, considering the three month trading range for the AUDUSD. There is still plenty of risk out there for today, although investors will have to wait until overnight for Powell and the US jobs report for the moves. The Dollar seems to be on a rebound, with the risk of a jawbone lower from Powell a factor overnight. However, if the US NFP report is much better than expectations, there is a chance that the Dollar comeback could gain serious momentum with the AUDUSD taking a further dip lower.


Range for the day : 0.7590 – 0.7700


AUD/USD Technicals


Finally, a change following the break overnight. With the momentum shifting to bearish the target will be sub 0.7600 with 0.7590 and 0.7530 on a further break higher in the Dollar. Intraday will be keeping an eye on the exp200DMA at 0.7672 as profit taking may occur after the break.

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