9th July 2020 - Bulls keep the reins with eyes on 0.7000 ahead of China CPI/PPI


Good Morning,

Market Headlines

US Dollar retraced against all major currencies, showing reduced safe-haven appeal for now, as U.S. tech stocks rallied and commodity prices firmed, even as sentiment remained cautious amid a resurgence of new coronavirus cases globally, particularly in the United States. The NASDAQ index gained 0.8% on the day, reversing Tuesday’s loss, feeding the currency market’s risk appetite.

Currencies

US Dollar Index finished 0.4% lower on the day.

EUR ranged from 1.1260 to 1.1352

USD/JPY ranged from 107.60 to 107.20.

AUD ranged from 0.6930 to 0.6983.

NZD ranged from 0.6530 to 0.6578.

AUD/NZD ranged from 1.0600 to 1.0625.

AUD Thoughts

- AUD/USD portrays a fourth attempt to pierce the key 0.7000 threshold.

- Broad US Dollar weakness, upbeat equities and commodities helped Aussie to ignore pandemic fears.

- Australian policymakers escalate efforts to tame the coronavirus spread, US-China tussle intensifies.

- China inflation data, Australian housing market figures and US Jobless Claims to decorate the calendar

Looking forward, markets will look to Chinese inflation data for June with forecasts suggesting recoveries. Locally, Home Loans and Investment Lending for Homes, as well as weekly US Jobless Claims, are some other data that should be watched for immediate trade direction. However, all these shouldn’t dim the prospect of the virus updates and headlines concerning China to move the markets.

The AUD sustained trading beyond the 21-day Simple Moving Average (SMA) and an upward sloping trend line from May 15, around 0.6910/05, keeps it on the bulls’ radars. However, buyers remain cautious considering multiple failures to cross 0.7000, a break of which could escalate the north-run to attack June month’s high of 0.7065.

Event Risk Data Today

Australia: Investor finance (market f/c: -7.0%), housing finance (market f/c: -5.5%) and owner occupier finance (market f/c:-5.0%)

New Zealand: ANZ Business Confidence

China: PPI inflation for June (market f/c: -3.2%). Market expects a gradual improvement in CPI inflation, from 2.4%/yr to 2.6%.

US: Initial Jobless Claims is expected to fall from 1427k to 1375k. Wholesale Inventories are expected to continue to be volatile in the coming months ahead given global uncertainty (prior and May market f/c: -1.2%).

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