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MARKET WRAP – Friday 20th May

  • The Australian dollar shrugged off negative local data and reached a fresh weekly high against its American rival at 0.7072. The pair preserves its strength, despite the poor performance of global indexes indicating prevalent fear.

 

  • Stocks were lower in choppy conditions Thursday with a mid-session push into the black ultimately failing to sustain. European trade saw a nasty tumble in the major indices.

 

  • The US data didn’t make much of a dent on stocks despite the Philly Fed survey tumble and the spike higher in initial jobless claims, with stock futures already making a recovery from their London lows.

 

  • The NY session saw indices flirt on either side of flat, but ultimately dipping lower into the close. In sectors, Staples, Tech, and Industrials led losses, while Materials outperformed with firmer metals prices, followed by Health and Discretionary.

 

  • Oil prices were firmer but choppy, gyrating to the whims of the broader risk tone, while reports that China is in talks with Russia for oil purchases were in focus.

 

FX

 

  • The Aussie saw similar gains with AUD/USD reclaiming 0.7070 from lows of 0.6953 while NZD/USD reclaimed 0.6400 from lows of 0.6292.

 

  • The April Australian jobs report disappointed expectations, rising by 4k, beneath the expected 30k rise as part time employment tumbled, although full time employment saw a strong 92.4k gain.

 

  • The latest ECB minutes added little new to the recent ECB commentary and just further cemented ECB language that if the upside risks to inflation were confirmed in the June projections, the ECB Council would face the question of whether continuing net purchases beyond June would still be appropriate.

 

  • Meanwhile, on rates, some members viewed the higher-than-expected inflation figure in March and inflation expectations moving above the 2% target as requiring an adjustment of the monetary policy stance towards a neutral position sooner rather than later.

 

TODAY’S KEY RISK EVENTS

  • Japanese National CPI
  • New Zealand Trade & Credit Card Spending
  • PBoC loan Prime Rates
  • GBP Retail Sales

CURRENCY/INDICIES RANGES
Currency Pair Low High
AUD/USD 0.6944 0.7072
EUR/USD 1.046 1.0608
GBP/USD 1.23385 1.2523
USD/JPY 127.03 128.94
NZD/USD 0.6292 0.6415
USD/CAD 1.2784 1.289
USD/CNH 6.7171 6.7881
AUD/JPY 88.95 90.53
AUD/NZD 1.0998 1.1067
DXY 102.657 103.877

 

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