10th November 2021 - Risk sentiment appeared to weaken broadly overnight. AUD hit 0.7361 low.

Market Headlines

Risk sentiment appeared to weaken broadly overnight with risk sensitive currencies, bond yields, and equities all lower.

The S&P500 is down 0.5%. There was no major market-moving news. The US dollar index was down 0.1% on the day, with safe-havens performing best and risk-sensitive currencies worst. EUR ranged between 1.1570 and 1.1608 for little net change. USD/JPY ranged between 112.75 and 113.30, the yen outperforming.

Underperformer AUD fell from 0.7432 to 0.7361. NZD fell from 0.7174 to 0.7110. Australian 3yr government bond yields (futures) ranged between 1.04% and 1.08%, while the 10yr yield fell from 1.83% to 1.75%. Markets are now fully pricing the first RBA rate hike to be in July 2022.

Commodities: Brent crude oil futures rose 1.1% to $84, copper fell 0.6%, gold rose 0.2%, and iron ore fell 1.5% to $92.

Overnight Currency Range

Currency Pair Low High

AUD/USD 0.7361 0.7432

EUR/USD 1.1570 1.1608

GBP/USD 1.3524 1.3607

USD/JPY 112.73 113.11

NZD/USD 0.7110 0.7174

USD/CAD 1.2430 1.2486

USD/CNH 6.3868 6.3978

AUD/JPY 83.08 84.07

AUD/NZD 1.0332 1.0380

AUD Thoughts

AUD/USD traded to a low of 0.73605 overnight after earlier peaking at 0.7432. Demand rest as close as 0.7350/60 and again ahead of 0.73c while offering interest is consistently staggered all the way to 0.75c. It opens this morning at .7380 ahead of today’s data releases in consumer sentiment and weekly payrolls due later this morning.

Event Risk Data Today

Aust: WBC-MI Consumer Sentiment could receive a boost from the continued easing of restrictions and rising vaccination rates in November. Weekly payrolls will reveal the strength of the NSW recovery during the two weeks to October 16.

NZ: October REINZ house sales are expected to report a lift as Covid restrictions ease. House prices are likely to maintain the momentum carried through the delta lockdown.

China: The October CPI release will highlight persistent weakness in consumer inflation (market f/c: 1.3%yr) despite robust upstream price pressures (PPI market f/c: 12.4%yr).

US: October’s CPI result is expected to be driven by a lift in core prices (Westpac f/c: 0.5%, market median 0.6%). The gradual downtrend in initial jobless claims should continue. The final release of wholesale inventories for September is also due.

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