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Market Update

EncoreFX’s daily market updates are written by our experienced and professional dealing team.

Sentiment Shift

Published April 2, 2019

By Nicholas Cork

The weekend Chinese PMI data set the tone for a positive 24 hours with sentiment further boosted as Sweden, Norway, UK, and the USA also released PMI data that outperformed. The UK PMI hit year highs but a massive amount of pre -Brexit stockpiling contributed to those numbers. US retail sales data for Feb disappointed but was overlooked as January was revised up a not insignificant 0.5%….

In trade land, Chinese VP Liu He is heading to Washington tomorrow with a team of trade negotiators, expect sentiment to remain buoyed in the interim. US yields have performed a hand-stand with the curve 15 to 20 basis points above Friday’s yield levels. There is talk now that Japanese profit-taking en masse in US Treasuries was behind last weeks’ move.

After testing 0.7130, AUD has drifted lower overnight and filled the gap from yesterday mornings’ open. AUD crosses are elevated and AUDJPY is above 79.00, indicating that risk is on-ish, but would take a break of 80.00 to confirm. The AU yield spread to the US has blown out again and should be a negative for the AUD, but Trade hopes are outweighing for now. The technical picture is getting interesting as the triangle has narrowed to a 0.7080/0.7140 range.

Will the RBA today be the catalyst for a break-out like the RBNZ was last week for the NZD?

AUDUSD – Reuters