After achieving record highs on Friday, US equities fell overnight amid proposed legislation which would hinder tech companies. The S&P500 is currently down 0.50%. That sentiment didn’t affect other asset classes with the defensive US dollar falling and bond yields rising slightly. The US dollar index is down 0.5% on the day, to a six-week low. EUR rose from 1.1960 to 1.2048 (six-week high) before consolidating. USD/JPY fell from 108.65 to 108.01 (six-week low).AUD rose from 0.7730 to 0.7785 (one-month high) before settling around 0.7750. NZD similarly rose from 0.7145 to 0.7198 (one-month high) before settling around 0.7175. AUD/NZD fell from 1.0830 to 1.0799.
Commodities, Brent crude oil futures rose 0.4% to $67.05, copper rose 1.6%, iron ore rose 0.2% to $177.45, and gold fell 0.3%.
Overnight Currency Ranges
AUD/USD 0.7706 0.7784
EUR/USD 1.1942 1.2048
GBP/USD 1.3810 1.3993
USD/JPY 108.01 108.83
NZD/USD 0.7117 0.7198
USD/CAD 1.2472 1.2544
USD/CNH 6.5016 6.5347
AUD/JPY 83.77 84.22
AUD/NZD 1.0802 1.0833
AUD/USD: Expected to consolidate in a 0.7700-0.7800 range, with a positive bias near-term.
The Aussie has looked more fragile in recent weeks with strong resistance at 0.80 and in recent week sliding under 0.7600 for the first time since early February. The market believes an extension to 0.7500 or below is plausible should the US dollar draw support from an economic rebound fuelled by a huge fiscal injection and rapid vaccine rollout. Australia continues to run historically very large trade surpluses, with Q1 set to be the 8th consecutive quarter of current account surpluses. A$ should benefit from anticipation of a synchronised global recovery over 2021, especially in Asia. Australia’s coronavirus containment is allowing substantial freedom of economic activity though the RBA’s dovish stance should limit the upside on yields and thus on A$.
Event Risk Data Today
Australia: The RBA minutes from its early April meeting may provide colour on shifting risks as activity surprises to the upside.
New Zealand: The market expects the bi-monthly GDT dairy auction tonight to result in a 2% rise in whole milk powder prices, resuming the upward price trend after a pause. Futures markets also predict a 2% rise
UK: The February ILO unemployment rate is expected to hold at 5.0% as the extended furlough scheme continues to support the labour market.