Volatility Abandons Currency Markets
AUD
The AUD had a relatively subdued overnight session, trading within tight ranges across most major currency pairs, GBP excluded. In fact, AUDUSD has opened the last four days within a 17 pip range! Local equity markets had a mixed session of trading, Shanghai Comp up +0.4% and the Nikkei was down -0.3%, the ASX closed its session with no movement and remains above 7000 points. Commodities had a positive session of trading, Gold was up 0.3%, Iron Ore up 1.1% and Copper was up 3.1%, commodities likely to have supported the AUD after a snap 7-day lockdown in Victoria. A quiet day ahead on the economic calendar in Australia, investor attention will shift towards the US Wage data this evening and further speculation on rising Covid cases in Victoria.
USD
Groundhog Day! The AUDUSD pair remains trading within similar levels to yesterday, sitting at 0.7743 this morning. US Equity markets posted modest gains overnight, the Dow Jones up 0.4%, and the S&P 500 was up 0.1% while NASDAQ closed with no movement at 0%, all US Equities remaining within reach of their all-time highs. US 10-year yields rose 3bps to 1.6% and Oil was 1% higher to $66.80 a barrel. Markets paid little attention to the US Data last night after the initial Jobless Claims fell to 406,000 from 440,000 and the Bureau of Economic Analysis left its second estimate of annualised GDP growth unchanged at 6.4%, weaker than the expected 6.5% forecasted. To the economic calendar this evening, trader’s attention will shift toward the US Wage Data for April. Macquarie Strategy think personal income should show a substantial decline reflecting a diminishing impulse from stimulus checks. Spending growth is likely to be overwhelmingly in services reflecting re-opening. Retail sales figures suggested weak goods consumption during the month.
EUR
The AUDEUR also sitting in comparable levels to yesterday morning, trading at 0.6338 at the time of writing. European Equities posted mixed results, DAX was down -0.3%, while CAC was up +0.7%. Eurostoxx 600 closed 0.27% higher, retaining its post-covid highs. Traders' attention remains on the progress of the vaccine rollout in Europe, along with rising optimism on economic growth prospects. There won’t be any high-tier data releases featured on the European docket this evening with only French Prelim GDP & CPI due tonight.
GBP
The AUDGBP pair lost some ground overnight, rising to as high as .55, before coming back to trade at 0.5450 this morning. UK Index FTSE had a minor loss of -0.1% overnight. The sterling might be set to suffer on virus variants and mounting pressure among covid news, Secretary for health Matt Hancock stating that the variant first identified in India is of concern in Britain and beyond. France joined Germany in demanding quarantine from those arriving from the UK. While the vaccination campaign continues at full speed and the economy continues reopening. No-noteworthy data on the docket this evening with a bank holiday in the UK on Monday, Investors attention focused toward BOE Governor Bailey on Wednesday June 2nd.
NZD
The AUDNZD pair traded within tight ranges overnight, coming in to trade at 1.0626 at the time of writing. Both antipodeans lacking directional bias after mixed data was released in the US, among the hawkish tone from the RBNZ on Wednesday. The RBNZ’s had made clear that any rate hike will be ‘conditional on the economic outlook’. No Data on the docket this evening with only Final ANZ Business Confidence due Monday.