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Global Market Update
The View from Australia

by Craig Killaby | September 15, 2021



> AU Westpac Consumer Sentiment: 2.0% v. -4.4% prev.

> CN August Retail Sales: 2.5% v. 6.9% exp

> CN August Fixed Asset Investment: 8.9% v. 9.1% exp

> CN August Industrial Production: 5.3% v. 5.8% exp

> CN August Unemployment Rate: 5.1% v. 5.1% exp

> EU July Industrial Production: 1.5% v. 0.6% exp

> US August Industrial Production : 0.4% v. 0.5% exp


Overnight Headlines (BBG)

> Metal prices continued their whippy run of price action, with aluminium gaining as figures out of China showed that they had dropped their output during the summer months

What you need to know

The Asian session was dictated by the data that came out of China in their monthly data dump, with nearly all aspects of the data missing estimates with the most concerning being the sharp drop in retail consumption as the Delta outbreak put a dent into consumer sentiment. The AUDUSD was trading near the 0.7300-middle leading into the mid-day release, as investors seemed cautious on how to react to a US CPI report that did not clearly show whether or not the spike in recent inflation is in line with the Fed’s definition of transitory. As the China data missed the mark, the AUDUSD was sold off and touched the lowest level in just over two weeks, as a fresh low of 0.7301 was posted. There was a recovery throughout the remainder of the session, although unable to crack through the 200EXPMA (30min) level, which is sitting at 0.7347 as I write this morning.


Broad FX movements were minor, with the DXY sitting back down below 92.50 and off near 0.2% on the session. AUD crosses largely unchanged, as AUDCAD the biggest loser down 0.3% as WTI crude posted strong gains. The move higher in the price of oil boosted the petrocurrencies, with CAD and NOK two of the best performers as the US EIA report showed a surprising drop in US oil stockpiles. US industrial production numbers for August eased some investor nerves on the Delta downturn, with the figures showing that US production is back above pre-pandemic levels although supply chain issues remain as the fallout from Hurricane Ida is expected to weigh in September’s figures. US equity markets had a strong day, as the S&P500 is back up near 0.9% as the near 3% rise in oil dragged energy higher and risk appetite took a very slight turn positive. Elsewhere in commodities Iron Ore continues to drop, down another 5.7% and only a touch above the US$100/tonne level. Copper bucked the trend, up 3% while Gold reversed recent gains down 0.6%.


The Day Ahead




> NZ Q2 GDP : 1.1% exp.

> AU August MI Inflation Expectations : 3.3% prev.

> AU August Employment Change & Unemployment Rate : -78.5K & 5.0% exp.

> EU ECB President Lagarde to speak

> CA August ADP Non-Farm Employment Change : 221.3K prev.

> US August Core Retail Sales & H/line Retail Sales : -0.1% & -0.7% exp.

> US August Philly Fed Manufacturing Index : 18.9 exp.

> US Weekly Unemployment Claims : 325K exp.


The focus today will be in APAC, as Q2 growth numbers from across the Tasman will likely set the stage for what will be a pivotal session as we close out the week. The main event for AU will come at 11:30am, by way of the August employment report as it is expected to be an ugly one following a significant surprise in the July release. Following comments from Lowe early in the week on the elevation of the jobless rate, that will be the key number that we will be watching with the headline number expected to be volatile as lockdowns continued across the country.


Range Today : 0.7300 – 0.7360


AUD/USD Technicals


After a very brief bout back above the 0.7400 handle, the pair now looks poised to test support seen at the 0.7290 level as the uncertainty around the Dollar’s direction still the main takeaway. The first hurdle will be the level mentioned above at 0.7347, while the 55DMA continues to drift lower as 0.7368 remains the key on a move higher.

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