AUDUSD Day’s Range: 0.73193 – 0.73450
AUDUSD dropped as the data from China was worse than the expectations. Yesterday’s Chinese fixed asset investment was 1%below expected, July retail sales were 2.4% below and the unemployment rate was 0.1% higher. Investors are concerning that the spread of the COVID-19 Delta variant will seriously impact the growth expectation of China in the second half of 2021. The AUDUSD is also hit by the negative risk sentiment. The COVID-19 situation in Australia is getting worse, with the daily number of new cases 400 level for several days. It is expected to be tough number of months for NSW, the arrival of more Pfizer vaccines is the key lifeline.
The dollar rose against commodity currencies such as USD, NZD and CAD. The dollar index rose 0.1%.The safe-haven yen gained as the disappointing economic data from China, political tension in Afghanistan and the spread of COVID-19 Delta variant cause concerns to the market. The U.S. stocks doubled from March 2020 pandemic closing lows. The benchmark S&P 500 rose 0.3% on Monday, its fifth consecutive gain.
David Wilcox, a former Fed research director, and David Reifschneider, a special advisor to former Fed chair Janet Yellen argued that continued higher prices in the future may be needed to support economic growth and deliver jobs boom. They said that once the COVID-19 pandemic passes and the Fed is able to raise the interest rate, it should then increase the national inflation target from 2% to 3% and use a shock treatment of surprise rate cuts to hit it.
Data :
- CN July Fixed Asset Investment 10.3% vs. 11.3%
- Industrial Production : 10.3% & 7.9% exp.
- CN July Retail Sales 8.5% vs. 10.9% exp.
- Unemployment Rate : 5.1% v. 5.0% exp.
- JP June Revised Industrial Production : 6.5% v. 6.2% exp.
- US August Empire State Manufacturing Index : 18.3 v. 28.9 exp.
Major moves in the market:
Stocks
- S&P 500 futures fell 0.1% as of 7:05 a.m. in Tokyo. The S&P 500 rose 0.3%
- Nasdaq 100 futures were steady. The Nasdaq 100 was little changed
- Nikkei 225 futures rose 0.7%
- Australia’s S&P/ASX 200 Index futures rose 0.1%
- Hang Seng Index futures rose 0.1% earlier
Currencies
- The Japanese yen was at 109.25 per dollar
- The offshore yuan was at 6.4765 per dollar
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was at $1.1778
Bonds
- The yield on 10-year Treasuries declined one basis points to 1.27%
Commodities
- West Texas Intermediate crude was at $67.46 a barrel
- Gold was at $1,787.20 an ounce
Upcoming data
- AU RBA August Meeting Minutes
- UK July Average Earnings Index & Claimant Count Change : 8.6% & -84.1K exp.
- UK July Unemployment Rate : 4.8% exp.
- EU Q2 Flash GDP : 2.0% exp.
- US July Core Retail Sales & H/Line Retail Sales : 0.2% & -0.2% exp.
- US July Industrial Production : 0.5% exp.
- US Federal Reserve Chair Powell to speak (3:30am AEST)