A$ Falls Sharply On Strong US Data And Equity Sell Off

Aussie fell sharply on Tuesday underperforming the G10 with only kiwi weakening more. Aussie started weakening following disappointing retail sales and continued the downtrend through the day on weaker risk appetite. The USD strengthened 0.6% following stronger-than-expected data. AUDUSD was around 0.6530 before the US ECI and then fell to a low of 0.6472. The pair is down 1.4% to 0.6473.

• Tuesday’s sharp move down in AUDUSD may signal a possible reversal of the recent rally. A break below 0.6363 would resume this year’s downtrend. Initial support is at 0.6441 and resistance at 0.6587.
• AUDJPY fell 0.5% to 102.11 after a high of 102.90 during Tuesday’s APAC session. It is now close to the intraday low. AUDNZD is 0.1% higher at 1.0996. AUDEUR fell 0.9% to 0.6068 and AUDGBP -0.9% to 0.5182.
• Equities also weighed on the Aussie with the S&P down 1.6% and Euro stoxx -1.2%. Oil prices continued falling with Brent down 1.5% to $85.92/bbl. Copper is down 2.9% and iron ore is around $115/t.
• The RBA meets next week on May 7 and we don’t expect them to change rates. MNI policy notes that ex-RBA staffers believe that the bar to the resumption of rate hikes is high despite the stronger Q1 CPI (see MNI: Bar Remains High For Renewed RBA Hiking - Ex-Staffers).
• Today the final April Judo Bank manufacturing PMI prints. The preliminary rose to be close to the breakeven-50 mark.