Over the
weekend Australians voted in a Labour government after almost a decade of
Conservative rule. The election result saw a shift in the country on the
pivotal role of climate change. Incoming Prime Minister-elect Anthony Albanese
told Australians in his victory speech that “together we can end climate wars.”
In early Asian trade this morning, the Australian Dollar (AUD/USD) steadied to
0.7050, little-changed from Friday’s opening (0.7045).
Overnight,
the Aussie Battler slid to a low at 0.7002 before rallying. The Dollar Index
(USD/DXY), a popular measure of the US currency’s value against a basket of 6
major rivals, gained 0.29% to 103.02 following its slide to 102.77. The Euro
(EUR/USD) faltered, settling at 1.0565 at the New York close after attempting
to break above the 1.0600 level. Sterling (GBP/USD) edged modestly higher to
1.2480 (1.2460 Friday), after failing to clear the 1.2500 resistance level.
Against the Japanese Yen, the Greenback was
little changed at 127.85 from 127.80. Overnight, the USD/JPY pair traded to a
high at 128.30. The Dollar was mostly lower against the Asian and Emerging
Market currencies. USD/SGD (US Dollar-Singapore Dollar) dipped to 1.3800 from
1.3815 while the USD/CNH pair (US Dollar-Offshore Chinese Yuan) slumped to
6.6900 from 6.7200 on Friday. The US 10-year Treasury Bond Yield fell 6 basis
points to 2.78%, leading other global rates lower. Germany’s 10-year Bund was
unchanged, closing with a yield at 0.94%. Japan’s 10-year JGB note was flat at
0.23%. Most global stocks finished with moderate gains. The DOW edged up to
31,295 from 31,245 while the S&P 500 finished at 3,907 (3.901 Friday).
Data
released on Friday saw UK GFK Consumer Confidence dip to -40 from a previous
-38, lower than estimates at -39. New Zealand’s Trade Surplus climbed to +NZD
584 million, beating expectation of -NZD 352 million. Japan’s National Core CPI
rose to 2.1% from a previous 0.8%, and higher than estimates at 2.0%. Germany’s
April PPI was up to 2.8% against expectations of 1.4% but lower than the
previous 4.9%. UK April Retail Sales jumped to 1.4% from a previous -1.4%, and
higher than estimates at -0.2%. Eurozone Consumer Confidence saw a -21.0 read
from a previous -22 and median estimates at -21.5.
·
EUR/USD – The shared
currency retreated in early trade Friday hitting 1.0533 overnight lows from its
opening at 1.0580. In late New York, the Euro rebounded to 1.0599 overnight
highs before easing to settle at 1.0565 at the close. Net speculative Euro
shorts were on the bid paring their positions.
·
AUD/USD – The
Australian Dollar rebounded off its overnight low at 0.7002 after opening at
0.7050 on Friday. The election result had little effect on the Australian
Dollar which held its gains versus the overall weaker Greenback. The newly
elected Labour government is not expected to change the stance of the RBA.
·
USD/JPY – Against the
Yen, the Greenback finished at 127.85, little changed from Friday’s open at
127.80. Overnight high traded was at 128.30. A paring of speculative long
Dollar bets weighed on this currency pair. Overnight low recorded was at
127.53.
·
GBP/USD – Sterling saw
a modest bounce to 1.2480 at the New York close from Friday’s open at 1.2460.
The GBP/USD pair initially traded to an overnight high at 1.2500. Overnight low
traded was at 1.2430. In early Asian trade, the British currency rallied to
high of 1.2511 before settling back to 1.2500.
On the
Lookout: This
week starts off with a light economic calendar today amidst a Canadian holiday.
There are no major Australian and Asian data releases. The World Economic Forum
holds its meeting today in Davos, Switzerland.
This meeting
usually attracts media scrutiny because world authorities exchange opinions on
a variety of major topics. Climate change, economic instability and growth are
among the major topics discussed. Germany releases is May IFO Business Climate
(f/c 91.4 from 91.8 – ACY Finlogix). Germany’s Bundesbank follows with its
Monthly Report.
The US round
up a quiet calendar with its Chicago Fed National Activity Index for April (no
f/c, previous was 0.44). The calendar picks up during the week with the release
of Global Manufacturing PMIs which are released tomorrow. The US also releases
its April New Home Sales data.
Wednesday
sees US Headline and Core Durable Goods Orders for April and the release of the
FOMC Minutes (early Thursday, Sydney time). The US reports its Preliminary
Estimate of Q2 GDP Growth Rate on Thursday. Friday sees the release of
Australian April Retail Sales and US April Personal Spending and Personal
Income.
Trading
Perspective: Support for the US Dollar emerged following a bout of
profit-taking and position adjustments on Friday. The Dollar Index (DXY)
rebounded off its overnight lows at 102.77 to 103.02 at the close. Last week
the DXY hit a high at 104.45. Global treasury yields were lower led by a slide
in the benchmark US 10-year rate which settled at 2.78% (2.84% Friday). This should
keep the Dollar’s topside limited. At the close of trade on Friday, speculative
market positioning remained long of the Greenback. Ahead of key economic data releases this
week, expect consolidation today in FX.
·
EUR/USD – After
holding various attempts to break lower, the shared currency saw speculative
shorts chase offers pushing it to a high at 1.0599. The Euro dipped to finish
at 1.0565 in New York. Overnight low traded was at 1.0533. For today, immediate
resistance lies at 1.0600 followed by 1.0630 and 1.0660. A break above 1.0600
could see 1.0650 and 1.0700. On the downside support lies at 1.0530 followed by
1.0500 and 1.0470. Expect consolidation today in a likely range of
1.0520-1.0620. Preference -trade the range today.
·
AUD/USD – The Aussie
Dollar has come back bid despite a change in government where the leftist
leaning Labour Party took power. In early Asian trade, RBA Assistant Governor
Christopher Kent told a conference in Sydney today that current policy was
quite stimulatory. The AUD/USD pair rallied to 0.7070 from 0.7050, before
settling at 0.7062. Immediate resistance lies at 0.7100 and 0.7130. Immediate
support can be found at 0.7030, 0.7000 and 0.6970. Look for consolidation, with
a likely grind higher for the AUD/USD between 0.7030-0.7130. Trade the range
today, there’s more volatility to come.
(Source: Finlogix.com)
·
GBP/USD – The British
Pound lifted against the broadly based weaker Greenback past the 1.2500
resistance barrier in early Asia to a high at 1.2512. Currently the GBP/USD
pair traded at 1.2505. For today, immediate resistance lies at 1.2530 followed
by 1.2560. Immediate support can be found at 1.2470. On Friday, Sterling opened
at 1.2465. The next support level lies at 1.2440. Look for Sterling to trade a
likely range today of 1.2450-1.2550.
·
USD/JPY – Against the
Japanese Yen, the Dollar saw a more subdued trading day on Friday, settling at
127.85 from its opening at 127.80. Overnight high traded was at 128.30. On the
day, immediate resistance can be found at 128.00, 128.30 and 128.60. Immediate
support lies at 127.50 (overnight low traded was at 127.53). The next support
level is found at 127.20. Look for a sideways trade initially today in USD/JPY,
likely between 127.50-128.50. Prefer to buy dips toward 127.50.
Have a good
Monday start all, and a profitable trading week ahead.
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may have been written by a third party. ACY makes no representation or warranty
and assumes no liability as to the accuracy or completeness of the information
provided, nor any loss arising from any investment based on a recommendation,
forecast or other information supplied by any third-party. This content is
information only, and does not constitute financial, investment or other advice
on which you can rely.
This article was written by Michael Moran, ACY Senior
Currency Strategist at ACY Securities.