A$ Holds Recent Ranges, Retail Sales Data Out Today

The A$ spent the post Asian close range bound between 0.7060-0.7100. The currency underperformed USD weakness seen against other majors and firmer risk appetite, particularly in equities. We start today just below 0.7100.

• US and EU equities were stronger overnight, while the US VIX index dipped further to 27.50%. This should leave a positive bias for regional equities today. Note also the China Golden Dragon index rose 7.6% in US trading.
• Commodities were more mixed, much on the focus on the break higher in oil (Brent up +3% to $117/bbl). Iron ore was higher as well, back above $130/tonne, but it remains within recent ranges. Copper came off by 0.50% and is still down for the week.
• Yield spreads remain in recent ranges for the front-end, but AU has lost ground at the back end, back below 50bps in the 10yr spread with the US.
• CNH underperformed, with USD/CNH holding above 6.7600 for much of the post Asia-close. This likely capped AUD/USD upside to some degree.
• Today delivers April retail sales. The market expects a 1% rise, following last month's 1.6% gain.
• The 50-day EMA at 0.7172 remains the upside bullish target. We have to clear 0.7120 first though. Support is evident on moves below 0.7060. Below that 0.7002 (May 20 low) and 0.6950 (May 18 low) are additional support zones.