A$ Weaker In Early Trade As Equity Futures Fall

We are testing overnight support levels sub 0.7100 in early trade today, as US equity futures plunge. AUD/USD spent most of the post Asia close consolidating above 0.7100. We couldn't get beyond the 0.7125-30 region though.

• US tech futures are much weaker in early trade, down over 1.6%, led by social media stocks after Snap cuts its guidance. US and EU stocks were higher overnight (+1.5-2.0%), while the VIX index edged down slightly to 28.50%.
• Commodities were also higher. Copper rose 1.55%, and is up over 7% since the mid-May lows. Iron ore is around the $134/tonne level.
• Talk of greater fiscal stimulus from China helped. The China cabinet reportedly implement a 33-point fiscal plan, including - tax relief for business, increased credit for SMEs and lower taxes on car purchases.
• The A$ saw some some underperformance relative to the EU bloc post the Asia-close, as the DXY plunged to 102 as EUR/USD surged.
• Technical studies point to the potential for a climb towards the 50-day EMA at 0.7181. Gains are still considered corrective and the primary direction remains down. Gains are still considered corrective and the primary direction remains down. The bear trigger is unchanged at 0.6829, the May 12 low. Initial firm support is at 0.6950, the May 18 low.
• PMI prints for May are on tap, along with weekly consumer sentiment.