Markets were soothed by disappointing US jobs data which dampened concerns the Fed may taper QE sooner than indicated. The S&P500 closed up 0.9% - near the record high, while bond yields and the USD fell sharply in response. US 2yr treasury yields fell from 0.16% to 0.15%, while the 10yr yield plunged from 1.63% to 1.55%. Australian 3yr government bond yields (futures) traded around 0.21%, while the 10yr yield fell from 1.62% to 1.56%.
Commodities, Brent crude oil futures rose 0.8% to $71.90, copper rose 1.4%, and gold rose 1.1%, while iron ore fell 1.0% to $208.65.
Overnight Currency Ranges
AUD/USD 0.7651 0.7745
EUR/USD 1.2104 1.2186
GBP/USD 1.4082 1.4200
USD/JPY 109.37 110.32
NZD/USD 0.7133 0.7215
USD/CAD 1.2070 1.2133
USD/CNH 6.3853 6.4107
AUD/JPY 84.34 84.84
AUD/NZD 1.0710 1.0758
A quiet day ahead where the main data point is China’s trade balance. The report could confirm China’s robust external demand in May. The Caixin manufacturing PMI, which covers more of the exporters, strengthened in May and notably, export growth of Korea also accelerated. China’s exports should remain resilient and stay as the most important growth driver in the post pandemic recovery in the near term. Imports growth is expected to continue to rise with a lower base of commodity prices.
The AUD/USD benefitted from the broad based USD weakness of Friday and topside resistance is still expected ahead of 0.7815 while support should materialise if we dip back toward 0.7650.
Event Risk Data Today
Australia: May ANZ job ads will be released. While measures of job vacancies have forged ahead in recent months, employment growth has been more subdued.
New Zealand: Queen’s Birthday public holiday.
China: The trade balance will be supported by robust export growth, both in the upcoming May release and throughout the year. The May update on foreign reserves is also due.
Euro Area: June Sentix investor confidence will continue to advance as the economic recovery gathers pace (market f/c: 23.8).
US: Consumer credit should continue to find support in April on strong auto loans (market f/c: $22.5bn).