Markets appeared to overlook a disappointing US jobs reports, assuming it will hasten agreement on a government relief package. The S&P500 rose 0.9% to a fresh record high, with bond yields also rising, although most risk-sensitive weakened slightly. US 2yr treasury yields slipped from 0.16% to 0.15%, while the 10yr yield rose from 0.91% to 0.98% - a high since March. Australian 3yr government bond yields (futures) traded around 0.19%, while the 10yr yield rose from 1.00% to 1.07% - a high since June. Commodities, Brent crude oil futures rose 0.6% to $49.25 – the highest level since March, copper rose 1.0% to an eight-year high, iron ore rose 5.0% to $144.85 – a seven-year high, and gold fell 0.1%.
AUD/USD: 0.7410 – 0.7443
EUR/USD: 1.2110 – 1.2177
GBP/USD: 1.3409 – 1.3540 (three-year high)
USD/JPY: 103.82 – 104.24
USD/CAD: 1.2773 – 1.2847
NZD/USD: 0.7028 – 0.7069
AUD/JPY: 77.03 – 77.53
AUD/NZD: 1.0509 – 1.0570
The AUD/USD closed last week at 0.7426 with offering interest at 0.7450 likely to cap us at the first attempt while buying interest has grown and rest between 0.7350/70.
Event Risk Data Today
Australia: RBA Governor Lowe will deliver the keynote address to the Australian Payments Network, titled “Innovation and Regulation in the Australian Payments System”. The November AiG PSI will be published; the index jumped 15pts in October to realise its first print above 50 since Nov 2019. ANZ job ads have seen a strong reopening rebound ahead of the November update, but are still down 16%yr.
China: Two November releases - the trade balance, which has benefited materially from European and US demand (market f/c: CNY373.20bn), and foreign reserves, which have trended down from a peak in August (market f/c: $3150.00bn).
Euro Area: Two competing forces will govern the outcome of the December Sentix investor confidence index - concerns of a “double-dip” growth profile and positive news around the vaccine (market f/c: -7.8).
Germany: October industrial production will be squeezed by renewed lockdowns, but Germany’s relative success in controlling the virus is a positive (market f/c: 1.6%).