AUD/USD Falls Before Key Q1 CPI at 11:30am Today
AUD
The Aussie Dollar continues to trade at sub 0.71 levels this morning in what is a strange week with the long Easter break and then Anzac day messing with liquidity and data flows. With no real data prints to consider thus far, the AUD moves have been dictated by offshore events, strong US earnings data has given the big dollar a boost and the illiquid trading conditions have exasperated the AUD sell off. Commodities have failed to provide support, the CRB index is off to the tune of 0.2% although Oil does continue to rally on the back of supply concerns. We do have key local data today though, the Q1 Inflation report (CPI) to print at 1130 and will be closely reviewed for any further signs of weakness that may prompt the RBA to further consider cutting rates. The RBA expectation is for +0.45% trimmed mean inflation, a weaker actual will increase calls for the central bank to cut. After hitting the lows of 0.7082 overnight it is clear there is some expectation this print will be a miss and if so, we may see the AUD sell off accelerating. Support should be found at 0.7050 then 0.70 if this level fails.
USD
US markets all received a boost overnight, fueled by decent earnings reports and the easing of the FED intention to tighten policy. The S&P actually hit an all-time high overnight which shows traders confidence is growing despite the ongoing tensions between the US and China. At the close the DOW had increased by 0.6%, the NASDAQ was up 1.3% and the S&P just off the highs but up just under 1% to 2939. These gains also carried through to the USD with the DXY increasing by 0.32% to 97.59. The strong return to form for the S&P and the high earnings reports meant the greenback could push higher across the board despite mixed data prints, House Price Index missed by 0.2%, New Home Sales though did smash forecast of -2.7% to print an actual of 4.5%. Mortgage Applications to print tonight ahead of Thursdays Durable Goods and Jobless Claims data. US GDP numbers will close out the week on Friday along with Personal Consumption and Core PCE.
EUR
It was a positive night for equities, U.S stocks received the most bids as corporate earnings impressed, CAD and DAX made gains, the MIB and IBEX losing a small amount of ground. The Aussie lost out in general terms as traders prepare for today's important Q1 CPI result. The forecast is starting from a low base of 0.2%, historically Q1 results are low, a surprise either way would get the AUD moving. Oil price in Q1 could be a drag on inflation, and with the RBA having a history of cutting rates on the back of weak core inflation, today's result is vital for AUD direction. New dwelling purchase cost inflation could also serve as a drag on inflation and if NZ's latest inflation result is anything to go by we're in for a low number. The Aussie economy has a knack of getting itself out of a tight spot though so anything is possible. Apart from today's local data the calendar is very quiet with just an IFO Survey from Germany this evening.
GBP
The FTSE performed well overnight on account of the weaker Pound, up 0.9%. The Pound dipped against the USD and briefly took the AUD down to 0.5460, before popping back up to 0.5483 this morning. The Pound looks to be struggling for value as the prospects of a delayed Brexit and a central bank on hold give investors little reason to hold Sterling. The Tories are plotting, P.M May looks like she could be pressured to leave her P.M post at any time to give the Tories a chance of reclaiming some of the seats they will lose to the Brexit Party. Traders are wary ahead of this morning's Q1 CPI data, with no U.K data this evening and Brexit headlines on the thin side Pound strength will be dictated by flows in and out of the USD for the most part. The DXY brielfy moved up to 97.65 overnight and looks like it wants to push past this stubborn resistance.
NZD
The Kiwi looks like a shot duck at the moment, falling to fresh lows of 0.6626 against the USD overnight. AUD/NZD has cooled it's northerly run through 1.07 for the time being on account of today's Q1 CPI data.
Today’s data
AUD:
Q1 CPI
EUR:
German IFO Survey