- The Trump Administration announced a six-month delay on auto tariffs against the EU, slated for 18 May.
- Italian political tensions were heightened as Lega’s Salvini pushed further for Italy to be prepared to breach EU Budgetary Guidance and pushed against his coalition partner and 5-Star leader Di Maio and PM Conte. Political tensions are building across Europe as populists gather force in front of next week’s EU Parliamentary elections
- The US 10yr treasury yield fell from 2.42% to 2.36% and the 2yr yield fell from 2.21% to 2.14% before the tariff news caused both to bounce a few bps.
- The chance of a Fed rate cut by December, implied by Fed fund futures, rose to 130%, with September priced at 70%.
- Gold steadied as share markets rose but concerns about global economic growth and the U.S.-China trade fight kept the metal supported near a one-month peak. Spot gold was steady at $1,296.64 per ounce
- Chinese steel futures rebounded from five-week lows as concerns over the economic impact of a U.S.-Sino trade war subsided, helping lift prices of steelmaking raw materials, including iron ore.
- Copper extended its rebound as hopes the U.S. and China would forge a trade deal overshadowed largely disappointing economic data from top metals consumer China. Aluminium, however, slipped after Chinese output gained, fanning fears of oversupply. Three-month LME copper climbed 1% to $6,085 a tonne in closing open outcry trading after hitting a 3-1/2 month low on Monday. Benchmark LME aluminium ended up 0.5% at $1,855 a tonne.
- Oil futures inched up as the prospect of mounting tensions in the Middle East hitting global supplies overshadowed an unexpected build in U.S. crude inventories. Brent crude settled at $71.77 a barrel, gaining 53 cents or 0.7%. (WTI) crude futures settled at $62.02 a barrel, climbing 24 cents or 0.4%.
- The US dollar index is up 0.1% on the day, closing at 97.57.
- EUR initially probed lower to 1.1178 but bounced to 1.1225 after the US car tariff news, little changed overall.
- USD/JPY also round-tripped, from 109.70 to 109.16 and back.
- AUD initially extended its multi-week decline, to 0.6915 (a low since Jan 2016), before bouncing slightly to 0.6937 on the tariff news.
- NZD extended a multi-week decline to 0.6551 before bouncing.
- AUD/NZD ranged between 1.0545 and 1.0570.
- AUD/EUR ranged between 0.6170 / 0.6190
- Global trade news continues to become an important catalyst.
- Australian employment numbers are in the spotlight for now.
AUD/USD is taking the rounds to 0.6930 during the early Asian session on Thursday as Aussie traders await monthly jobs data.
With the US-China tariff war risk looming across the global markets, news concerning the US delaying car import duties by six months and is close to a deal with Canada and Mexico that can avoid metal tariffs tried restoring investors’ confidence off-late.
The US 10-year treasury yield, considered as a barometer of global risk, initially dropped to 2.36% but later on improved to 2.38% as trade optimism sneaked.
Looking forward April month employment change and the unemployment rate will be crucial to watch considering the Reserve Bank of Australia’s (RBA) latest statement emphasizing the need to lower the unemployment rate.
Forecasts suggest a 14.0K increase in employment change from 25.7K prior with a likely rise in the unemployment rate to 5.1% versus 5.0% earlier.
Also, in the data line is China’s April month housing price index and foreign direct investment (FDI). The housing price gauge grew 10.6% in its previous release whereas FDI marked 6.5% rise during prior readouts
With the 0.6900 round-figure and January 2016 lows near 0.6830 still being untouched, chances of the pair’s pullback to four-week-old resistance-line at 0.6975 can’t be denied. Also, pair’s sustained run-up beyond 0.6975 can avail 0.7000 and 0.7050 as intermediate stops ahead of questioning 50-day simple moving average (SMA) near 0.7075.
Event Risk Data Today
- Australian Economic data today : April employment is expected to rise 15k and see the unemployment rate hold at 5.0%. Westpac sees a smaller 10k increase and a rise in unemployment to 5.1%.
- RBA Assistant Governor (Financial System) Bullock speaks at the ASIC Annual Forum, Sydney 12:45 pm
- Tonight - Euro Area: Mar trade balance is released.
- Tonight - US: Apr housing starts and building permits data is released. Fedspeak involves Kashkari on the economy and policy