News & Resources

Market Analysis

Latest Insights
Press Releases
Latest Insights

Global Market Update
The View from Australia

by Craig Killaby | July 12, 2021

Data/Speakers

 

> JP June PPI : 5.0% v. 4.8% exp.

 

Overnight Headlines (BBG)

> Expectations in NSW of a long COVID winter are starting to mount, with the state recording the highest case numbers since March 2020 as the vaccine rollout continues to struggle

What you need to know

A lack of data to kick off the trading week saw a relatively uneventful trading day, however a surprising article from the AFR sent the AUDUSD sliding mid-morning. An article was released by the Australian Financial Review that reported that APRA has asked local financial institutions to prepare their models for negative rates. The article is a surprise as it is a stark contrast from the comments from local RBA Gov. Lowe that negative rates are not something that they are looking at to assist in the recovery. It seemed as though the move might have been just a worst-case scenario disaster planning recommendation, nonetheless the AUDUSD was sold off throughout the day, although likely to have been more the move in USDCNH that caused the real movement.

 

FX markets open up this morning largely unchanged, with the Dollar up a touch and holding above the 92.00 level on the DXY, as the rise of the Delta variant around the world grows. UK health officials are bracing for potential health risks to come from the complete abandonment of restrictions with “Freedom Day” fast approaching on July 19th with GBPUSD largely unchanged.

 

The overnight session was very light in terms of data, with all eyes on the US CPI report to come this evening with inflation back on the mind of investors. UST yields rose amidst weak demand at the overnight auction, with the UST10y yield back up above 1.3600%. Equity markets both locally and abroad had a decent start to the week, with the ASX up 0.8% while Chinese stocks gained following the RRR cut from the PBOC. US equities continue to trudge higher with the S&P500 setting yet another all time high and looking poised to take the 4400.00 level. Commodity markets mixed, with Base Metals the strongest performers on the session as both Iron Ore and Copper are up on the session with Copper up 1.5%. Gold down a touch on the slight move higher in US yields, while WTI crude opens up down 0.6%.

 

The Day Ahead

 

Data

 

> AU June NAB Business Confidence : 20 prev.

> CN June Trade Balance : 271Bio exp.

> EU June German Final CPI : 0.4% exp.

> US June Core CPI & H/line CPI : 0.4% & 0.5% exp.

> US FOMC Member Bostic to speak

 

Tier two data hitting the wires today in Asia, with the June NAB business survey kicking it off this morning and likely to show a pullback in both confidence and conditions in the wake of the recent spike of COVID19 cases.

 

Chinese trade figures will be the main event, with the data from China now in focus following the surprise move from the PBOC as questions arise as to the health of the Chinese economy.

 

All eyes on this evening’s US inflation report, due to be released at 10:30pm AEST as the inflation narrative takes centre stage yet again. Strong inflation numbers may see the Dollar surge as investors position for quicker Fed tightening, with a soft print likely to see a move higher in risk sentiment. NSW continues to be in focus at 11am AEST for those living in Sydney, with the extension of the lockdown widely expected to come at some point this week, with the question now being how long. Wide range to reflect this evening’s inflation read out of the US.

 

Range Today : 0.7440 – 0.7525

 

AUD/USD Technicals

 

Lower highs to kick off the week seems to be a concerning sign for AUDUSD bulls, with 0.7500 needing to be broken to bring 0.7520 into play. Not expecting a major break during today’s session, with the move likely to come overnight on the US inflation read. A strong CPI print leaves the YTD low of 0.7410 vulnerable, while 0.7525 is the upside target intraday.

“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.