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Market Brief
Australian Gross Domestic Product (GDP) rose 1.8 % quarter on quarter for the first three months of 2021, according to figures released by the Australian Bureau of Statistics (ABS) today. Head of National Accounts at the ABS, Michael Smedes said: “With 1.8% growth in the March quarter 2021, Australian economic activity has recovered to be above pre-pandemic levels and has grown 1.1% through the year.” The data point shows that the Australian economy has expanded for three consecutive readings but as the base effect’s rollout of the last years data the increase in GDP is slowing towards the pre-pandemic mean.
The ActivTrader sentiment indicator shows that the traders using the platform are generally balanced in their direction bias with bears to bulls 52% v’s 48% currently.
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The AUDUSD is almost trapped within a 0.7770-0.7700 range, with the Ichimoku cloud signalling daily support currently. A lot of this is down to the US dollar being unable to move significantly away from the $90 level on the DXY, so traders for now should play the intraday ranges, selling the tops and buying the bottom.
German retail sales came in worse than expected this morning. According to preliminary results from the Federal Statistical Office (Destatis), retailers in Germany had calendar and seasonally adjusted sales in real (price-adjusted) 5.5% and nominal (not price-adjusted) 5.4% less than in March 2021. The fall was put down to the Federal law which legally obligated the individual German states to follow tighter restrictions to flatten the covid-19 transmission curve. As well as non-essential shops closing, the government implemented a curfew and school closures.
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The EURUSD is generally range bound around the 1.2200 level, but the ActivTrader sentiment indicator remains bearish with 62% of traders shorting the currency pair. On a daily chart the price action is still well above the 20, 50 and 200 period exponential moving averages, and the lack of new higher highs is reflected in the weakening RSI indicator, which is also failing to create higher peaks.
The rest of the day should be quiet with no further Tier 1 data to be released. There are plenty of bankers talking so twitter headline reading algos may add a bit of spice into the US session. At the NYC cut there are a large amount of AUDUSD options expiring today at 0.7740-0.7750, leaving Friday to be the main event day for news driven events post tomorrows ISM data and US unemployment claims.
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The USDJPY during this quiet period looks the most likely to continue higher today, having pull back into the previous breakout levels without taking out a significant swing low. Over the past few weeks, we have been monitoring the price action in the Japanese yen crosses and with today’s price action breaking above yesterday’s high, we could be on for a trending move.
