15th November 2021 - AUD recovers from a 1 month low to open at 0.7335

Market Headlines

US equities rose, the S&P500 up 0.7% on the day. The AUD and NZD also performed well, after initially making one-month lows. Short-maturity bond yields fell. The US dollar index closed down 0.1% on the day. EUR ranged between 1.1433 and 1.1462. USD/JPY fell from 114.30 to 113.76. Outperformer AUD rose from 0.7277 (a one-month low) to 0.7335. NZD rose from 0.6997 (a one-month low) to 0.7048. AUD/NZD rose from 1.0370 to 1.0391. US 2yr treasury yields fell from 0.54% to 0.50%, while the 10yr yield ranged between 1.54% and 1.58%. BEI inflation rose from 2.70% to 2.72% via 2.76% - the highest on record. Markets are fully pricing the first Fed funds rate hike to be in August 2022.

Commodities: Brent crude oil futures fell 0.8% to $82, copper rose 1.1%, gold rose 0.2%, and iron ore fell 4.9% to $89.

Overnight Currency Range

Currency Pair Low High

AUD/USD 0.7277 0.7335

EUR/USD 1.1433 1.1462

GBP/USD 1.3354 1.3425

USD/JPY 113.77 114.30

NZD/USD 0.6996 0.7047

USD/CAD 1.2542 1.2604

USD/CNH 6.3690 6.3949

AUD/JPY 83.07 83.55

AUD/NZD 1.0381 1.0410

AUD Thoughts

AUD/USD bounced out of last week’s lows to close the week at 0.7330. Demand now rests ahead of 0.7260 and again nearer 0.72c while supply remains consistently staggered to 0.75c. Market believes there are signs that November’s downward correction may be complete and expect some consolidation around 0.7300.

Event Risk Data Today

Aust: RBA Assistant Governor (Economic) Ellis to appear before the House of Representatives Tax and Revenue Committee, 11:30am.

NZ: The October Business NZ PSI is expected to lift as Auckland’s restrictions eased. September’s net migration will remain subdued given closed borders.

Japan: The impact of delta and supply chain issues will hit Q3 GDP (market f/c: -0.2%) and September industrial production.

China: Although the services PMI was promising, retail sales growth will likely slow in October as delta hinders consumption (market f/c: 3.7%yr; 14.7%ytd). October’s industrial production growth is meanwhile expected to slow because of supply issues and power outages, and regulatory change should continue to place pressure on fixed asset investment (market f/c: 6.2%).

Europe/UK: Europe’s trade balance for September may narrow further, continuing the downward trend seen through 2021. November’s Rightmove house prices could see house price growth approach 2020’s peak of 6.6%yr.

US: The November Fed Empire state survey will provide a timely update on the NY manufacturing sector.

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