Market Headlines
US dollar and bond yields fell after a disappointing US jobs report. Equities remained elevated, the S&P500 up 0.1%.
US ADP private-sector employment disappointed again, with a rise of 374k against the median expectation of 639k (prior 326k). The report cited persistent challenges attracting applicants to vacant roles. There were also concerns over delta causing uncertainty in hospitality/dining despite that sector seeing the largest payroll gains.
ISM manufacturing activity in August beat expectations with a rise to 59.9 (est. 58.5, prior 59.5). Respondents cited increasing demand, tight supply, rising prices, and continued optimism. The employment sub-index did fall below 50.0 to 49.0 (from 52.9), but this reflected tight labour supply due to Covid constraints and hiring difficulties.
Commodities: Brent crude oil futures fell 0.4% to $71, copper fell 2.2%, gold rose 0.1%, and iron ore fell 6.2% to $142 amid further evidence of China’s curbs on steel production.
Overnight Currency Range
Currency Pair Low High
AUD/USD .7308 .7384
EUR/USD 1.1794 1.1857
GBP/USD 1.3732 1.3799
USD/JPY 109.88 110.42
NZD/USD .7034 .7077
USD/CAD 1.2581 1.2637
USD/CNH 6.4472 6.4638
AUD/JPY 80.55 81.13
AUD/NZD 1.0379 1.0435
AUD Thoughts
A quieter day on the data front with the tier 2 data unlikely to garner much attention. Investors are looking to tomorrow’s monthly US employment report for the next clear direction in risk sentiment.
AUD/USD traded firmly in a 0.7308/.7384 range overnight although we remain within the broader range and all key technical levels remaining in place.
Offering interest should emerge around 0.7400/.7415 with potential for further gains to 0.7425 – the early August high. Downside demand is expected back toward 0.7260.
Event Risk Data Today
Australia: Trade balance for July is expected to widen to a new record surplus of $12.3bn on commodity price and volume gains. On the domestic front, total housing finance is expected to rise 1% in July as investors’ strengthening appetite for property offsets a softening in owner-occupier demand.
NZ: Terms of trade are expected to rise 3.2% in Q2, thanks to broad-based gains for export prices following a broadly flat Q1.
US: weekly initial jobless claims should hold to their long-standing downtrend. The trade deficit should again print a near record level, thanks to consumers’ elevated demand for imported goods. Finally, the FOMC’s Bostic will speak on the path to an inclusive economy.