Sentiment remained upbeat as US economic data beat expectations, compounding the impact of Friday’s stellar jobs data. The S&P500 is up 1.4% on the day and at a fresh record high. The defensive US dollar fell, while bond yields preserved Friday’s gains.
FOMC member Mester said that the strong payrolls report confirmed that the economic outlook is improving but it is still far from their goals. “I think that we need to be very deliberately patient in our approach to monetary policy…It was a great report. It’s nice to see those numbers. We’re still almost 8.5 million jobs below where we were before the pandemic. So we need more of those kind of job reports coming out to actually make more progress than we’ve seen so far”.
Commodities, Brent crude oil futures fell 4.0% to $67.25, copper rose 3.8%, and gold fell 0.1%.
Overnight Currency Ranges
AUD/USD 0.7599 0.7660
EUR/USD 1.1738 1.1819
GBP/USD 1.3790 1.3912
USD/JPY 109.96 110.75
NZD/USD 0.7017 0.7070
USD/CAD 1.2502 1.2595
USD/CNH 6.5531 6.5832
AUD/JPY 84.09 84.38
AUD/NZD 1.0824 1.0840
Focus shifts towards the April RBA meeting today with markets expected to be largely benign but will garner most of the domestic attention. Markets expect the RBA will maintain current policy settings at the April Board Meeting. These settings include: "targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program"
The AUD/USD peaked at 0.7660 overnight with further offering interest likely to materialise if we push toward 0.7750. Demand remains thin but will likely emerge if we see a dip to the 0.7560 region
Event Risk Data Today
Australia: Markets expect the RBA will maintain current policy settings at the April Board Meeting. These settings include: "targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program". March ANZ jobs ads will serve as an indicator of the strength of the labour market heading into the post-JobKeeper period.
NZ: The GDT dairy auction was last week priced by futures markets to result in a 4% fall in whole milk powder prices. The government will make an announcement on an NZ-Australia travel bubble.
China: The release of the March Caixin Services PMI follows an outsized 5 point increase in the official PMI (market f/c: 52.1).
Euro Area: The market expects that April Sentix investor confidence will tick up to 6.7. Meanwhile, with furlough schemes across the bloc continuing to constrain job losses, the unemployment rate is expected to hold at 8.1% in February.
US: February JOLTS job openings are expected to hold around current levels (market f/c: 6900).