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Global Market Update
The View from Australia

by Craig Killaby | June 6, 2021



> JP April Household Spending : 13.0% v. 8.6% exp.

> CA May Employment Change & Unemployment Rate : -68.0K & 8.2% v. -23.5K & 8.2% exp.

> US May Average Hourly Earnings : 0.5% v. 0.2% exp.

> US May Non-Farm Employment Change & Unemployment Rate : 559K & 5.8% v. 645K & 5.9% exp.

> CA May Ivey PMI : 64.7 v. 62.3 exp.

> US April Factory Orders : -0.6% v. -0.3% exp.


Overnight Headlines (BBG)

> G7 countries are heading towards a uniform minimum corporate tax rate of 15%

> US Fed Chair Powell made comments on the discussion of a US digital Dollar, with broad debate to come in the summer from the FOMC

What you need to know

Interesting end to the trading week, with FX markets showing just how impactful even a hint of Fed tapering discussion can be, with the conflicting ADP and Non-Farm Payroll reports from the US seeing UST yields and the Dollar whipsawed to close the week. It was all about the US NFP report on Friday, which was tipped to exceed street estimates following the very strong ADP payrolls number the day prior. That was not to be, as the employment report missed street estimates by adding less jobs than hoped in the month of May. Immediate reaction was a selloff in the Dollar, which was looking very strong in the aftermath of the ADP number and is now 0.4% lower from Friday’s opening prices.


The AUD and NZD caught the bid on the Dollar selloff, as Fed tapering jitters were eased as the softer than expected report may see policy shifts put on hold for the time being. Average hourly wages did tick higher, showing that those Americans that are being re-hired are asking higher wages, as inflationary signs are wiped from the landscape as yet. The unemployment rate also went lower, although likely due to a drop in the participation rate as some Americans choosing to put their employment hunt on pause leading into the summer reopening. US equity markets able to finish strong, seeing the S&P500 close the day up 0.9%. The AUD crosses are mostly higher on the Aussie’s outperformance, as commodity prices regain some of their lustre lost at the end of the week. Iron Ore surged to close the week, up another 3.3% while the rebound in Copper also saw it gain 1.4%. Gold also jumped on the Dollar selling, up 1.1%. While WTI crude continues to mount a steady run higher, up 1% and taking aim at USD$70/barrel.


The Day Ahead




> AU May AIG Services Index : 61.0 prev.

> CN May Trade Balance : 266Bio exp (CNY) & 50.5Bio exp. (USD)

> EU April German Factory Orders : 0.4% exp.

> US April Consumer Credit : 19.5Bio exp.

> NZ Bank Holiday – Queen’s Birthday


The Aussie kicks off the week back up above the 0.7700 handle and looking to trade within its recent range between 0.7700-0.7800 with little data catalysts on the calendar this week. The key events on the calendar will come about on Wednesday/Thursday, with a speech from RBA Ast. Gov Kent and the decision from the Bank of Canada hitting the wires on Wednesday.


The main event for the week will come from the US, with inflation top of mind for all financial assets the US CPI report for May will be very important and due to release Thursday 10:30pm AEST. Keeping an eye on the ongoing COVID19 situation in VIC, with hopes of a lockdown exit likely to gain momentum if cases continue to drop. The lockdown has had little impact on the local currency, however an exit may give sentiment a boost.


Range for the day : 0.7690 – 0.7760


AUD/USD Technicals


Back to the same boring technical picture, with the pair trading sideways on Friday and breaking higher back up towards the 0.7700-middle overnight. Seems to be some significant support around 0.7640, attracting buyers below the 0.7650 on export demand. Likely to see the AUDUSD drift higher back up towards 0.7760, with 0.7800/16 still needing to be broken for a change in bias.

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