US equities started the week in an upbeat mood, the S&P500 currently up 1.0%, led by technology stocks. The defensive US dollar fell, while bond yields remained subdued. Commodities, Brent crude oil futures rose 3.0% to $68.42, copper rose 1.1%, and gold rose 0.1%, while iron ore fell 4.6% to $187.75 (down a total of 20% from the early May record high, China’s price curbs having a clear impact).
Overnight Currency Ranges
AUD/USD 0.7706 0.7757
EUR/USD 1.2172 1.2230
GBP/USD 1.4112 1.4171
USD/JPY 108.70 108.99
NZD/USD 0.7158 0.7218
USD/CAD 1.2043 1.2085
USD/CNH 6.4094 6.4411
AUD/JPY 83.99 84.37
AUD/NZD 1.0742 1.0791
AUD/USD seesaws around 0.7750, after an upbeat start to the week, during the early Tuesday morning in Asia. The risk-barometer pair cheered welcome performance of commodities, especially gold, as well as equities to stay within a known trading range between 0.7700 and 0.7820. However, a lack of major catalysts in Asia probes the latest up-moves. A lack of major data/events offered a dull Monday morning to AUD/USD traders before the bulls stepped in amid the broad US dollar weakness and a run-up in equities and commodities. Behind the moves were downbeat US data and Fed comments suggesting that the jump in inflation is temporary.
AUD/USD remains range bound and demand is still expected ahead of 0.7700 while topside resistance should materialise between 0.7815/20.
Event Risk Data Today
Australia: The May 8 update of Weekly Payroll Jobs and Wages will give us a clearer read on the state of the post-JobKeeper labour market without distortion from the Easter period and school holidays.
Germany: The May IFO business climate survey is expected to climb to 98.1 as the European economic recovery continues to build.
US: Two measure of March house prices, FHFA house prices (market f/c: 1.3%) and the S&P/CS home price index (market f/c: 1.33%), will continue to point to robust house price growth on strong demand. However, there are signs that affordability is becoming a constraint, which is expected to underpin a 7.0% fall in April new home sales. May Conference Board consumer confidence, which lagged the broader recovery of economic activity, is expected to ease a touch to 118.9. The May Richmond Fed index is likely to show further signs of input price pressures and should edge up to 18. Finally, the FOMC’s Quarles will testify before the Senate Banking Committee.