US equities pared early gains following some mixed US economic data, the S&P500 up 0.1%. Bond yields also retraced, while currencies were mixed. US 2yr treasury yields rose from 0.14% to 0.15%, while the 10yr yield roundtripped from 1.60% to 1.64% and back. Australian 3yr government bond yields (futures) fell from 0.22% to 0.20%, while the 10yr yield rose from 1.63% to 1.66%.
Commodities, Brent crude oil futures rose 1.7% to $70.50, copper fell 0.5%, and gold fell 0.4%, while iron ore rose 5.0% to $207.45. The bi-monthly GDT dairy auction resulted in an overall price fall of 0.9%, with whole milk powder down 0.5% , broadly in line with earlier futures market predictions.
Overnight Currency Ranges
AUD/USD 0.7731 0.7769
EUR/USD 1.2214 1.2254
GBP/USD 1.4146 1.4250
USD/JPY 109.33 109.70
NZD/USD 0.7248 0.7288
USD/CAD 1.2007 1.2070
USD/CNH 6.3608 6.3857
AUD/JPY 84.68 85.04
AUD/NZD 1.0638 1.0702
Today’s Australian GDP is the major event on the domestic data calendar and following the release of partial indicators. Trading in the AUD/USD was subdued again and it remained in a tight 0.7731/69 range. Offering interest is expected to be significant ahead of 0.7815 while downside support should materialise as we approach 0.7665/70
Event Risk Data Today
Australia: Q1 GDP forecast (market median is 0.6%, 1.5%). The risks to the forecasts are arguably tilted to the upside (potentially as high as a 1.9%) – some analysts have a negative adjustment to allow for the apparent downside on Incomes. Key uncertainties and risks are around: services spending by consumers - to what extent was this hit by the snap lock-downs and the floods; as well as how GDP (income) and GDP (production) will print.
At 9:30am, the RBA’s Bradley Jones (Head of Economic Analysis) will give the keynote address at the Minerals Week Australia-Asia Investment Outlook in Canberra. At 7:00pm, RBA Deputy Governor Debelle and Michele Bullock, Assistant Governor (Financial System), will appear before the Senate Economics Legislation Committee (Estimates).
New Zealand: Markets are looking for the terms of trade to dip 0.5% over the March quarter. Expectations that the surge in oil prices over the quarter (of circa 20%) will be enough to offset rising export prices. Also, the spike in dairy export prices will not be reflected in trade data until the June quarter.
Euro Area: The April PPI is expected to rise 0.9%mth, driven by the recent rise in commodity and energy prices. This will see the annual pace spike to 7.3%yr on base effects.
US: The Federal Reserve’s Beige Book will provide an update on conditions across the Fed districts. The FOMC’s Harker will speak, and Evans, Bostic & Kaplan will speak jointly