US and European equities rebounded, the S&P500 currently up 0.9%. Risk sensitive currencies rose slightly, while bond yields were fairly stable. There was little market-moving news. Canada’s central bank reduced its QE pace.
The US dollar index is down 0.1% on the day. EUR roundtripped from 1.2030 to 1.9999 and back. The CAD outperformed, USD/CAD falling from 1.2653 to 1.2460 following the BoC’s announcement that it will reduce its bond purchase pace. USD/JPY ranged sideways between 107.95 and 108.30. AUD bounced off 0.7700 to 0.7762. NZD similarly bounced off 0.7163 to 0.7219. AUD/NZD nudged slightly lower to 1.0741 – a six-week low.
A weaker USD across the board pushed AUD/USD to the upside. The greenback weakened amid rising stocks. The US Dollar Index (DXY) failed to hold to gains and was moving toward 91.00.
Commodities, Brent crude oil futures fell 2.3% to $65.00 as US inventories rose, copper rose 1.7%, and gold rose 0.8%, while iron ore fell 1.1% to $185.75 after hitting a ten-year high the previous day.
Overnight Currency Ranges
AUD/USD 0.7698 0.7763
EUR/USD 1.1998 1.2043
GBP/USD 1.3886 1.3949
USD/JPY 107.88 108.28
NZD/USD 0.7163 0.7218
USD/CAD 1.2458 1.2654
USD/CNH 6.4879 6.5026
AUD/JPY 83.22 83.92
AUD/NZD 1.0742 1.0774
AUD/USD: The Aussie bounced strongly out of yesterday’s low of 0.76985 with demand still expected ahead of 0.7660 while offering interest is staggered up to 0.7820 but remains relatively thin. The market believes AUD will consolidate in a 0.7700-0.7800 range, with a positive bias near-term.
The AUD/USD again found support around 0.7700. A consolidation below that level may clear the way to more losses for the Aussie. The next support stands at 0.7670/75. On the upside, the pair faces a resistance currently at 0.7750. Above the next level to watch is 0.7780, with a break higher strengthening the bullish outlook.
Event Risk Data Today
Australia: Ahead of the Q1 NAB business survey, the March monthly measure had reported conditions at a record high.
Europe: The ECB will announce its monetary policy decision. The Council will restate their commitment to accommodative conditions and will acknowledge that any imminent lift in inflation will be temporary (and be treated accordingly in a policy context). There will be some cause for cautious optimism around the coming quarters, despite extended lockdowns delaying the reopening rebound. April consumer confidence will continue to be constrained by the lockdowns and slow vaccine rollout (market f/c: -11).
US: The Chicago Fed activity index dipped below zero in March, but is poised for a stronger print in April (market f/c: 1.25%). Initial jobless claims hit a pandemic low last week and the broad downtrend is expected continue. The March leading index will be supported by jobless claims, stock prices and the ISM survey (market f/c: 1.00%). March existing home sales are expected to decline 1.1% on tight supply and elevated prices. The Kansas City Fed index should keep pace with the strength seen in other manufacturing surveys (market f/c: 28).