Equities Help A$ Recovery, CAPEX Data Out Today

The A$ followed the broad gyrations of equity sentiment post the Asia-close. We dipped to just below 0.7040 but recovered towards 0.7100. We currently trade just below this level.

• US and EU equities were higher, while the VIX fell back to 28.37%. Equity sentiment appeared supported by no FOMC talk of larger rate hikes (beyond the already well discussed 50bps moves).
• US yields remained close to recent lows. Yield differentials for the AUD are holding within recent ranges.
• Commodities were mixed, copper was down by just over 1%. Comments from China Premier Li Keqiang that the economy is worse off in some ways than 2020 not helping sentiment. Still, iron ore held close to $130/tonne, where it has been for the past few days. Oil tracked near recent highs, with Brent just above $114/bbl.
• Today's data calendar sees Q1 CAPEX print. The market expects a rise of 1.5%, following last quarter's 1.1% gain. 2022/2023 CAPEX intensions will also be eyed.
• From a technical standpoint, the 50-day EMA at 0.7175 remains the near term bull target. Support at 0.7002, the May 20 low and 0.6950, the May 18 low, remain levels to watch on the downside.