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Global Market Update
The View from Australia

by Craig Killaby | June 7, 2021



> AU May AIG Services Index : 61.2 v. 61.0 prev.

> CN May Trade Balance : 296Bio & 45.5Bio (USD) v. 266Bio exp. (CNY) & 50.5Bio exp. (USD)

> EU April German Factory Orders : -0.2% v. 0.4% exp.

> US April Consumer Credit : 18.6Bio v. 19.5Bio exp.


Overnight Headlines (BBG)

> US Treasury Secretary Yellen’s comments over the weekend that higher US rates would be a ‘plus’ for the US economy saw investors wary during the North American session

What you need to know

Fairly quiet start to the trading week, especially during the Asian session as the price action was uneventful in bond, currency and equity markets. The Chinese trade numbers came in a touch softer than expectations, primarily on the export side as it missed the mark while the market reaction to the print was minimal in the FX space. The Aussie traded in a very tight range below 0.7750, hitting an intraday high overnight of 0.7766 and a touch below as I write this morning. NZDUSD did a little better, up 0.45% on the session, seeing the AUDNZD cross lower on the session.


Overnight, it was the US session that gave investors something to digest with the commentary from the US Treasury Sec. over the weekend seeing investors react accordingly as UST yields rose across the curve with the US10y yield up 1.6bps. US equity markets down marginally, although looking heavy following the global agreement on the 15% corporate tax rate. Biggest movement was seen in commodities, with Iron ore down over 5% post-trade numbers while the price of WTI crude was unable to continue its winning ways down 0.5%. Gold continues to be supported by higher inflation expectations, up 0.4%.


The Day Ahead




> AU May NAB Business Confidence : 26 prev.

> EU June ZEW Economic Sentiment : 85.5 exp.

> EU June German ZEW Economic Sentiment : 86.0 exp.

> EU Q2 Final Employment Change : -0.3% exp.

> US April Trade Balance : -68.5bio exp.


The quiet week continues again today, with NAB business confidence numbers the highlight on what will likely be yet another quiet session. The data starts to pick up tomorrow with Chinese CPI/PPI numbers around mid-day with RBA commentary also on the cards. Not expecting much movement overnight as the Fed now sits in their period of media blackout ahead of next week’s FOMC decision. Expecting a range trading Aussie today, with little to move the needle in terms of data.


Range for the day : 0.7730 – 0.7770


AUD/USD Technicals


With the 50/100DMAs converging, the pair seems content to trade in a tight range above the moving averages ahead of Thursday’s key US CPI number. Not expecting a major break in either direction today, with the bias still very neutral although momentum does seem to be slightly tilted to the upside.

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