US Equities extended their run, the S&P500 currently up 0.3% and at a fresh record high. The US dollar fell after CPI inflation data was only slightly stronger than analysts had forecast. US bond yields fell after the data, and again after a solid bond auction. Commodities, Brent crude oil futures rose 1.0% to $63.90, copper rose 0.5%, iron ore fell 0.5% to $171.85, and gold rose 0.7%.
Overnight Currency Ranges
AUD/USD 0.7585 0.7648
EUR/USD 1.1878 1.1948
GBP/USD 1.3696 1.3770
USD/JPY 109.05 109.75
NZD/USD 0.7004 0.7057
USD/CAD 1.2530 1.2630
USD/CNH 6.5426 6.5586
AUD/JPY 83.05 83.46
AUD/NZD 1.0819 1.0854
AUD/USD bulls catch a breather around 0.7642, following a stellar run-up from 0.7585 to refresh the weekly top, amid the early Wednesday morning in Asia. In doing so, the aussie pair consolidates recent gains, mainly earned through the weaker US dollar, amid a lack of major fresh catalysts.
While AUD/USD is considered a risk-barometer, Wednesday’s run-up in the Aussie prices can’t be traced for market optimism. The reason is that the US dollar index (DXY) dropped to the fresh three-week low and propelled the bulls despite risk-negative news. Other than the US-China tussle, news that the Johnson & Johnson’s coronavirus (COVID-19) vaccine in the US is stopped from use, for now, due to blood clotting issue gained major attention. Also in the focus were strong demand for the US 30-year bond auction that weighed on the Treasury yields and the US dollar. Furthermore, upbeat US inflation figures, widely expected, for March also weighed on the greenback. Although White House covid Coordinator Zients assured markets of no dearth of covid vaccines even if the Johnson & Johnson jabs are stopped, traders will keep their eyes on the vaccine developments for fresh impulse. Also, China again warned the US to not inch closer to Taiwan and the issue can weigh on the AUD/USD price if escalated.
Australia’s Westpac Consumer Confidence data for April, prior 2.6%, will decorate the calendar today. Ahead of the data, Westpac said, “Developments over the last month have been less upbeat, with yet another state 'mini-lockdown', this time in Brisbane, highlighting that sudden virus-related disruptions are still a risk.”
During the US session, a speech from Fed Chairman Jerome Powell will be important as traders would like to see how Powell reacts to the recent inflation figures and the bond auction.
AUD/USD was firm overnight and peaked at 0.7648 after earlier trading to a low of 0.7585. Technical resistance at 0.7660 and again at 7700 should slow any mover higher while demand likely remains ahead of 0.7560.
Event Risk Data Today
Australia: The April update of the Westpac-MI Consumer Sentiment Index will be released. Developments over the last month have been less upbeat, with yet another state 'mini-lockdown', this time in Brisbane, highlighting that sudden virus-related disruptions are still a risk. Australia's vaccine rollout is also running well behind schedule and struck a major problem late in the week when AstraZeneca advised against vaccinating those aged under 50 due to risks of rare but serious side-effects. News around the economy has been more positive – a strong Feb labour force report in particular – but there remains unease about impacts from the expiring JobKeeper scheme. Surging house prices may also be a factor for sentiment although this is often a 'wedge' issue for consumers due to affordability and sustainability concerns.
NZ: Markets are expecting no change in monetary policy settings at the upcoming RBNZ Monetary Policy Review, with the OCR to be held at 0.25% for the foreseeable future. A softer than expected starting point for the New Zealand economy will be balanced against a rapidly improving global outlook. The RBNZ is already braced for a near-term spike in inflation. However, this is expected to be temporary, and the RBNZ will reiterate that a sustained return to its inflation and employment goals is a considerable time away. February net migration will remain very low due to border closures.
Euro Area: Industrial production is expected to contract 1.2% in February, as rising case counts impede output.
US: Ahead of the March update, the import price index has been rising on stronger fuel prices. Following this, attention will turn to the Federal Reserve: the Beige Book will give an update on conditions across the Fed Districts, and Chair Powell will be speaking to the Economic Club of Washington. Vice Chair Clarida, Williams, and Bostic will also be speaking.