AUD/USD lastly broke out final week, buying and selling above 0.7700 for the primary time since 23 March. The soar occurred amid a broad-based fall within the US greenback, however commodities and Australia’s robust financial information present elementary help to the Aussie.
Commodities again the Aussie bounce
After 2 or 3 weeks of buying and selling very tight ranges, AUD/USD lastly broke out final week, buying and selling above 0.7700 for the primary time since 23 March. The soar occurred in offshore commerce, amid a broad-based fall within the US greenback.
Certainly the dollar fell towards all G10 currencies over the week. This got here as US Treasury yields fell to 1 month lows regardless of an enormous borrowing program and ongoing robust US financial information. The autumn in US yields raises the prospect of a resumption of the US greenback weak spot that was so pronounced in H2 2020.
Nonetheless, whereas a comfortable US greenback might have been the catalyst for the AUD/USD range-break, the Aussie can be larger towards many different currencies and we will level to some elements supporting sentiment.
Most notably, Australia’s 3 key information releases final week have been all very robust. Job creation in March was twice as quick as anticipated, up about 71,000, trimming the unemployment charge from 5.8% to five.6% regardless of a report excessive participation charge of 66.3%. This adopted the exceptional 6.2% soar in April Westpac shopper sentiment to a excessive since 2010 and the booming March NAB enterprise survey. This confirmed confidence at +15 versus a long run common of +6 and a shocking +25 on enterprise situations, a report excessive for the month-to-month sequence which started in 1997.
After all, some warning is warranted notably with any information that will likely be impacted by the expiration of the JobKeeper program on 28 March, most clearly April employment, due 20 Could.
Commodity costs are additionally lending help to the Aussie. Westpac’s basket of Australia’s key commodity costs rose to highs since January, led by iron ore which rallied to multi-week highs round $177/tonne. Additionally heading larger have been coal (each thermal and coking), liquefied pure fuel and copper. China reported a comfortable 0.6percentqtr rise in GDP in Q1 however March industrial manufacturing was nonetheless up 14.1% versus March 2020, with metal output rising rapidly.
Within the background, additionally it is useful for the Aussie to have equities rising as soon as extra, the MSCI World Index and the US S&P 500 ending the week at report highs. Equities will stay in shut focus within the week forward, with US earnings season in full swing.
Australia’s calendar is fairly gentle, with RBA minutes to elaborate on their firmly on-hold coverage stance and retail gross sales value watching however liable to distortions from e.g. the Brisbane mini-lockdown and a change in shopper spending to companies not lined by the retail survey. Whether or not AUD/USD can prolong its rally to above 0.7800 in all probability will depend on whether or not the US greenback can reverse its weak begin to the quarter.
Occasion threat this week
US Q1 earnings experiences (all week), RBA April assembly minutes, UK Feb unemployment, NZ dairy public sale (Tue), Aust Mar retail gross sales, NZ Q1 CPI, UK Mar CPI, Financial institution of Canada coverage assembly (Wed), ECB coverage resolution, US weekly jobless claims (Thu), Japan, Eurozone, US ‘flash’ April Markit manufacturing and companies PMIs, UK Mar retail gross sales (Fri)
— to www.actionforex.com