US equities fell (S&P500 -0.8%) as the ascent in bond yields resumed, allowing the defensive US dollar to firm slightly. February ADP jobs undershot expectations rising 117k vs a consensus of 200k. The data will bias expectations for Friday's Non-Farm-Payroll report downwards. Meanwhile, President Biden’s stimulus package is looking increasingly likely to win the support of moderate Democrats, with the package expected to be around USD1.6/1.7trn. On the commodities front, Brent crude oil futures rose 2.3% to $64.15, copper fell 1.8%, iron ore rose 0.6% to $176.70, and gold fell 1.4%.
Overnight Currency Ranges
AUD/USD 0.7770 0.7839
EUR/USD 1.2043 1.21135
GBP/USD 1.3921 1.4006
USD/JPY 106.7 107.16
NZD/USD 0.7238 0.7302
USD/CAD 1.2594 1.2657
USD/CNH 6.458 6.4782
AUD/JPY 83.09 83.74
AUD/NZD 1.0725 1.0749
AUD has been under pressure on Wednesday amid a broad deterioration in the market’s broad appetite for risk. The pair was trading in a 0.7820-40 range during the Asia Pacific/early European sessions but has since dropped back to trade on either side of the 0.7800 level. At present, the pair traders 0.3% or about 25 pips lower on the day.
Looking ahead, focus will return to domestic Aussie affairs during Asia Pacific session with the release of the January Trade report at 00:30GMT. The Trade Balance on the month is expected to come in at an AUD 6.5B surplus. At the same time as trade data, the final estimate of Australian January Retail Sales will also be released; markets expect the data to remain unrevised from the preliminary ABS estimate of +0.6% MoM
Offering interest ahead of 0.7900 still intact while downside support is expected to materialise ahead of 0.7720.
Event Risk Data Today
Australia: The ABS released preliminary estimates showing retail sales rose 0.6% in January, a partial rebound on a 4.1% fall in Dec. Australia's trade balance has been in surplus for 36 consecutive months - each month through 2018, 2019 and 2020. 2021 is set to start with another surplus. A forecast $8.3bn, up from $6.8bn in December. The RBA’s Kearns (Head of Financial Stability) will be participating at Moody’s Credit Trends at 2:25pm.
New Zealand: RBNZ Governor Adrian Orr speaks on “The Future of Monetary Policy” at Waikato University in Hamilton at 9:15am.
Euro Area: The unemployment rate is expected to hold around 8.3% in January, down from a peak of 8.6%, but compositional changes may be driving the decline. January retail sales are set to fall 1.4% and turnover will not have the opportunity to fully recover until lockdowns are relaxed.
US: Markets will be hoping that initial claims commence a new downtrend (market f/c: 755k). January factory orders should expand a further 2.1%, continuing the strong finish seen in business investment at the end of 2020. Fed Chair Powell will discuss the US Economy at a virtual event hosted by the Wall Street Journal