Overnight Market Activity
- GE: Markit manufacturing PMI, Apr: 44.5 vs. 45.0 exp.
- GE: Markit services PMI, Apr: 55.6 vs. 55.0 exp.
- EC: Markit manufacturing PMI, Apr: 47.8 vs. 48.0 exp.
- EC: Markit services PMI, Apr: 52.5 vs. 53.1 exp.
- UK: Retail sales x auto fuel (m/m%), Mar: 1.2 vs. -0.3 exp.
- US: Retail sales x auto, gas (m/m%), Mar: 0.9 vs. 0.4 exp.
- US: Philly Fed business outlook, Apr: 8.5 vs. 11.0 exp.
- US: Markit manufacturing PMI, Apr: 52.4 vs. 52.8 exp.
- US: Markit services PMI, Apr: 52.9 vs. 55.0 exp.
- JN: CPI ex fresh food (y/y%), Mar: 0.8 vs. 0.7 exp.
- US: Housing starts (k), Mar: 1139 vs. 1225 exp.
- US: Building permits (k), Mar: 1269 vs. 1300 exp.
- US: Existing home sales (m), Mar: 5.21 vs. 5.30 exp.
- The USD index is down 0.1 on the day, ending @ 97.30
- EUR rose from 1.1240 to 1.1262
- USD/JPY ranged sideways between 111.90 and 111.95, as it had the previous day
- AUD slipped from 0.7145 to 0.7126 lows
- NZD ranged sideways between 0.6673 and 0.6681
- AUDNZD slipped from 1.0695 to 1.0685
- AUDEUR dipped below 0.6350 towards 0.6320 lows
Australian employment data indicated that the labour market remains strong despite a small uptick in the unemployment rate. The AUD dollar rallied towards 0.7200 however since then has dropped back down to new lows around 0.7120 levels.
The Aussie dollar is on the defensive and threatening to violate its 21-DMA. This despite sharp rallies in oil and iron-ore as well as a downside miss to U.S. March existing home sales. Action is placing the AUD’s rally from the March low in jeopardy ahead of key upcoming APAC data. Australian Q1 CPI and RBA Trimmed mean CPI are due tomorrow (April 24) while China's April NBS and Caixin manufacturing and non-manufacturing PMIs expected on April 30. Of these releases, the CPI readings will get the most attention. Indeed, soft Australian inflation has been a conundrum for the RBA despite robust employment data. Inflation forecasts call for a deterioration from Q4 results, and lacklustre inflation has Australian short-term rates markets pricing in an RBA cut for Q4 2019. The expected rate cuts have helped mute AUD rallies and maintain the 0.7000/0.7200 range. However, should inflation surprise to the upside, the RBA will be less inclined to cut and Australian rates should rally.
AUD opened lower this morning as it continues to under-perform. AUD has performed poorly since the better Australian jobs data last Thursday. The failure to follow-through on the break of 0.7200 discouraged many in the market with AUD falling 0.27% while easing 0.36% vs NZD and 0.65% vs CAD. The move lower has AUD leaning against a cluster of key moving averages.
AUD pinned to the lows despite bullish factors. Oil & iron-ore gain while US housing data is below forecasts. AUD heavy & eyes 21-DMA despite bullish factors. Daily techs lean bearish, 10-DMA caps & daily RSI is biased down.
USD bid versus EM currencies & USD/CNH, more yuan weakness possible. AUD rally from March low in jeopardy, bulls need data help. AUD upside risks remain as long as key support near 0.7000 holds.
Both the 100 & 21-day moving averages come in at 0.7129 and the 55-day moving average comes in at 0.7111. Resistance at 10-day MA at 0.7157 and break eases the downward pressure.
Event Risk Today
- No Australian Economic data today.
- Euro Area: Apr consumer confidence is expected to edge up to -6.9 from -7.2, with - sentiment having stabilised in recent months.
- US: Mar new home sales are expected to bounce 4.9% following a 2.6% decline in Feb.