Stronger than expected ADP employment data from the US and the continued news of recovery trend from the Corona-virus pandemic spurred investor confidence overnight. The S&P 500 took its positive streak to 8 sessions with gains of 1.5%, while the Dow Jones rose 2.2%. US 2yr treasury yields rose from 0.16% to 0.20%, while the 10yr yield rose from 0.70% to 0.77%. Australian 3yr government bond yields ranged between 0.26% and 0.27%, while the 10yr yield rose from 0.94% to 1.02%. Brent crude oil futures rose 0.4% to $39.70 (a three-month high), copper fell 0.2%, iron ore rose 0.2% to $101.30 (a 10-month high), and gold fell 1.7%.
The US dollar index is down 0.4% on the day, to a fresh three-month low, USD continuing to grind lower on improving global risk sentiment.
EUR rose from 1.1180 to 1.1251 – a here-month high.
The safe-haven yen underperformed, USD/JPY up from 108.45 to 108.98 – a two-month high.
AUD consolidated recent gains, between 0.6860 and 0.6967 – levels last seen in January.
NZD rose from 0.6377 to 0.6444 – a three-month high.
AUD/NZD lost momentum, falling from 1.0860 to 1.0760
Markets focus now turns to economic releases to gauge the speed and success of the ongoing global recovery with another busy day ahead with domestic Trade Balance and Retail Sales data for April out today. For the April read, Markets is looking for the surplus to ease back to a still historically high $7.5bn. The final release of April Retail Sales will follow. The preliminary estimate, which covers 80% of the sector, revealed a dramatic 17.9% plunge in trade. Expectations the final print will be in line with the preliminary (f/c -18.0%).
With last night’s US ADP employment data surprising to the upside focus now shifts to the Initial Jobless Claims data ( released tonight ). The relentless rally in the AUD/USD subsided overnight although expectations are that for it rest ahead of 0.6850 while offering interest around the recent highs of 0.6982 should slow any move to the topside
Event Risk Data Today
Australia: Two major releases today, April’s Trade Balance & Retail sales
New Zealand: ANZ commodity prices
Europe: May Markit services PMIs & Euro Area retail sales. Focus then turns to the ECB’s policy decision and its asset purchase programme, and whether the ECB will expand its size or extend its duration.
US: The April Trade Balance & Initial Jobless Claims are due. The fall in continuing claims suggests peak unemployment is passing