5 January 2022 - AUD rebounds, up 0.6% to 0.7249 high.

Market Headlines

Wall street ended the session mixed with the Nasdaq underperforming its peers down 1.5%. The US 10-yr traded to 1.66% and USD/JPY climbed to 116.355, the highest level since 2017. AUD/USD reached 0.7249 highs, up 0.6% and NZD/USD printed to 0.6810. Crude advanced back to $80 after OPEC+ agreed to increase supply.

The ASX rallied 2% to 7589.8, just shy of its 2021 record closing, largely due to an energy stock rally. AUD/USD spent the Asian session climbing to finish near daily highs of 0.72155. Crude oil rose 0.2% to $79.15 a barrel, ahead of the OPEC+ meeting to discuss production. More than 1m people in the US were diagnosed with Covid-19, a new daily record.

Risk on momentum saw AUD/USD continue to climb up to new highs of 0.72165, as NZD/USD hovered around 0.6790. GBP/USD spiked up to highs of 1.35115 from 1.3461 lows following the open, with EUR/USD following suit moving from 1.12835 lows to reach 1.1307. USD/CAD moved back above 1.2745 as USD/JPY made new daily highs of 115.895.

The NY morning saw the commodity currencies the main beneficiaries as crude oil moved to 2% type gains. AUD/USD recovered to touch new highs of 0.7218 while USD/CAD fell to lows near 1.2700. GBP/USD going along for the ride, peaking at 1.3531.

US ISM Manufacturing for December printed at 58.7, down from 61.1 and below expectations of 60.0. Within the report, Employment was a little higher than expected though there was a significant reduction in Prices Paid, falling from 82.4 to 68.2 and coming in much weaker than expectations of 79.3. The USD declining in the aftermath of the data as US yields gave back earlier gains with AUD/USD climbing towards 0.7250 heading into the London rate set. NZD/USD made highs of 0.6824, EUR/USD reached 1.1323 and GBP/USD hit 1.35565 while USD/CAD fell below 1.2700 to reach 1.2668 lows.

Little movement seen over the NY afternoon with majors generally drifting off their highs and settling into small ranges ahead of the Sydney open.

Wall Street seeing a mixed session with tech stocks dragging the Nasdaq 1.5% into the afternoon, while the Dow was up 0.7% and S&P flat.

Overnight Currency Range

Currency Pair Low High

AUD/USD 0.7185 0.7249

EUR/USD 1.1272 1.1323

GBP/USD 1.3461 1.3556

USD/JPY 115.3 116.35

NZD/USD 0.6766 0.6824

USD/CAD 1.2668 1.2767

USD/CNH 6.3711 6.3833

AUD/JPY 82.82 84.17

AUD/NZD 1.0588 1.0638

AUD Thoughts

AUD/USD has rebounded off the lows following poor manufacturing data out of the US, causing some weakness in the big dollar. The Antipodeans were the main beneficiaries.

Today we have light data coming out of Asia, with the ANZ Job Advertisements having the potential to show better performance pre the effects of the Omicron variant. The data coming out of the US later tonight may throw more light on the pace of tightening.

Looking for bids ahead of recent lows around 0.7180 and further selling interest from 0.7270 for the sessions ahead.

Event Risk Data Today

AU: December ANZ Job Advertisements

EU: December Services and Composite PMI

US: December ADP Employment report, December Services and Composite PMI & FOMC minutes

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