Remains On The Front Foot

The A$ spent most of the post-Asian close on Friday well supported. We closed just above 0.7160 and open around this level this morning. Last week's +1.7% gain was the strongest since early March.

• Cross asset signals were positive, with US and EU equities up firmly, while the VIX index dipped below 26%. The US market liked the combination of slightly better than expected spending data and a as expected PCE deflator print.
• US yields were relatively steady, the 10yr down a touch, with yield spreads edging slightly back in AU's favor at the end of last week.
• Commodities were higher for the most part. Brent crude closing in on $120/bbl, while iron ore also firmed back towards $134/tonne. Copper was also higher by 1.2%.
• Reports from the weekend on eased mobility curbs in Beijing, as the Covid outbreak is deemed under control, coupled with further easing in Shanghai and additional stimulus measures may aid commodity sentiment today.
• Technical studies suggest the currency maintains a firmer short-term tone. The 50-day EMA is close by at 0.7169, while 0.7245 is 50% retracement of the Apr 5 - May 12 bear leg. Support at 0.7036, the May 25 low is seen.