First Post Job Keeper Employment Report Due Today

AUD

The AUD had a weak performance in the overnight session, as it fell across most major currency pairs, NZD excluded. The Aussie dollar came under pressure as Local equity markets failed to lend support on the AUD, the ASX, Nikkei and Shanghai Comp all taking substantial losses, the ASX taking the biggest hit and falling back below 7000 points (6932). Commodity markets also took a hit with Copper down -3.3% and Iron Ore the biggest loss of -4.4%. Important data is due locally at 11.30  this morning; Australia’s April Labour Force Survey is expected to be strong notwithstanding that it will pick up any initial effects of the end of the JobKeeper wage subsidy. ‘Shadow’ labour market indicators have remained robust since March, so it's possible we might still see a reduction in the Unemployment Rate which was 5.6% last time around in March. Markets are expecting the rate to remain unchanged and are looking for only a modest increase in jobs of 17.5k which could be a little undercooked.

USD

The AUDUSD pair lost some ground during last nights session, coming in at a rate of 0.7720 at the time of writing. Hawkish FOMC minutes weighed on US equity markets including on the S&P 500 which fell 0.3%, Dow Jones down -0.5% and the Nasdaq closed at no movement of 0.0%. Fed’s Bullard said that the US labour market was likely tighter than data portrays and suggested that the participation rate would not necessarily return to pre-pandemic levels. He also noted that he would like to see more evidence of an end to the pandemic before tapering asset purchases. The hawkish stance from the FOMC pushed US 10-year yields up 3.5bps to 1.675%. Important to note that the Fed is now talking about the considerations around QE tapering, a hawkish signal in itself that was not present just a week ago. A busy day ahead as investors digest the overnight FOMC minutes, Aussie Labour data and US unemployment claims tonight.

EUR

The AUDEUR pair followed suit with the losses as it dropped as low as 0.6330, before recouping some ground to trade at 0.6341 at the time of writing. Both currency pairs under pressure from the resurgent USD as markets digest the FOMC minutes from last night. European Equities also took a hit overnight, CAC down -1.4% and the DAX taking a substantial loss of -1.8%. ECB’s financial stability review yesterday had a sour tone, with reports the euro-area faces elevated risks to financial stability as it emerges from the pandemic with high debt burdens and “remarkable exuberance” in markets as bond yields rose, according to the ECB. The ECB had also stated that the uneven economic impact of the pandemic means financial stability risks are likely to materialize in sectors with pre-existing vulnerabilities, some investors are betting that the central bank will need to scale back its support sooner rather than later. Investors look forward to this morning’s Aussie labour data and Lagarde’s speech tonight at 10pm.

GBP

The AUDGBP stumbled in the overnight session as it trades at a rate of 0.5471 at the time of writing, weaker commodities not helping the AUD. UK CPI data released yesterday showed British consumer prices rose by 1.5% in April, the Office for National Statistics said, following a 0.7% rise in March vs an increase of 1.4% expected. The Bank of England says inflation in Britain is heading above its 2% target and will hit 2.5% at the end of 2021 thanks to a rise in global oil prices and the expiry in September of COVID-19 emergency cuts to value-added tax in the hospitality sector, as well as comparisons with the pandemic slump of 2020. No other note-worthy data on the calendar today, investors await UK Services and Manufacturing PMI data released on Friday night.

NZD

The AUDNZD managed to buck the trend and posted gains in the overnight session as it trades at 1.0777 at the time of writing. Both antipodeans relatively subdued as they both digest the FOMC minutes from the US overnight. Little economic data came out of New Zealand over the past few days, sluggish market sentiment amidst inflation jitters might be holding the NZD back. Investors await Aussie labour data today in addition to the annual NZD budget release