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Global Market Update
The View from Australia

by Craig Killaby | July 15, 2021

Data/Speakers

 

> AU June MI Inflation Expectations : 3.7% v. 4.4% prev.

> AU June Employment Change & Unemployment Rate : 29.1K & 4.9% v. 19.7K & 5.1% exp.

> CN Q2 GDP : 7.9% v. 8.0% exp.

> CN June Fixed Asset Investment & Industrial Production : 12.6% & 8.3% v. 12.1% & 7.8% exp.

> CN June Retail Sales & Unemployment Rate : 12.1% & 5.0% v. 10.9% & 5.0% exp.

> UK June Claimant Count Change & Unemployment Rate : -114.8K & 4.8% v. -32.5K & 4.7% exp.

> US July Philly Fed Manufacturing Index : 21.9 v. 28.1 exp.

> US Unemployment Claims : 360K v. 350K exp.

> US June Industrial Production : 0.4% v. 0.6% exp.

 

Overnight Headlines (BBG)

> COVID19 has now spread into VIC, with Melbourne forced into a snap lockdown in an effort to slow the spread of the virus

> US Fed Chair Powell continued his testimony, with a dovish tone prevalent as he acknowledged inflation at high levels

What you need to know

The Aussie seems to be trapped within its recent range below the 0.7500 handle, with markets turning cautious across the board as jitters about second half growth prospects was the major theme across the 24 hour session. Fair amount of data during the Asia day, with the AU unemployment rate dropping in the month of June locally, with investors largely shrugging off the positive jobs report with the strict lockdowns in NSW and now VIC expected to weigh heavy come next month.

 

Chinese numbers were mixed, with growth coming right near street estimates, although markets do seem wary of what is to come for H22021 from the world’s growth engine. AUDUSD reaction was a slow drift lower, although recovering later in the session only to slide even further as US equity markets slid as risk appetite took a turn for the worse.

 

Haven assets performed well on the day, with the JPY and CHF the strongest performers against a Dollar that is back up 0.25% in DXY terms. AUDUSD touched a session low of 0.7411 in the aftermath of yet another dovish speech from the Fed Chairman, with transitory inflation still being touted. WTI crude struggled in the commodities space, down near 2% and dragging the Loonie along with it as CAD touched the lowest levels since April against the USD. Base metals steady, as Copper and Iron Ore gained over 1% and Gold seems to have bounced off key support and rebounding up a touch on the day. Earnings season in the US has raised some eyebrows in the equities space, with tech shares struggling as both the NASDAQ and S&P500 closed lower on the day.

 

The Day Ahead

 

Data

 

> NZ Q2 CPI : 0.7% exp.

> JP BOJ Outlook Report and Rate Decision : -0.10% exp. (no change)

> US June Core Retail Sales & H/line Retail Sales : 0.4% & -0.4% exp.

> US July Prelim UoM Consumer Sentiment : 86.5 exp.

 

Following the late announcement from VIC that Melbourne will enter a snap lockdown yesterday, the pressure seems to be mounting on the local currency as the YTD low seems to be under some heavy pressure. NZ inflation numbers will be the main event in APAC, following the RBNZ’s hawkish tone earlier in the week, markets should be expecting an upside print in today’s consumer figures.

 

Need to keep a close eye on the weekly close, as the spread of the Delta variant raising concerns about the potential growth prospects for the remainder of the year a selloff into the weekend may signal a move down towards the 0.7250 level. US consumer sentiment and retail numbers will be the data highlight overnight, with all eyes on equities as earnings season takes the spotlight.

 

Range Today : 0.7415 – 0.7460

 

AUD/USD Technicals

 

Tough to paint a strong picture for the pair this morning, with risk aversion the theme the AUDUSD is struggling to stay afloat above the YTD low of 0.7410. Weekly close will be key, as a selloff into the overnight session may signal some real downside towards the 0.7250 level with little to hold up the pair.

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