The Australian dollar caught a bit of a tailwind heading into this morning’s private sector credit and the Purchaser’s Price Inflation Index releases, coming off session lows below .7450 as the market pared back some overnight shorts. But with the overhang from Trump uncertainty weighing on investor sentiment, it remains unlikely the market will take a significant position in either direction more so as next week could offer some challenges for “ yield appeal” with the FOMC on tap.With so much priced out of Fed policy this year, the only real surprise in my view would be a more hawkish lean from the Fed than the market expects.
Australian Q 1 Producer Price Index came in .5% vs .5% expected and year on year 1.3% vs .7 % prior .Private sector credit contracted .3 vs .5 % expected .But with national data taking a back seat to the bigger global picture while focusing on next week’s RBA response to their concerns about the labour markets, we should expect the Aussie to remain in offer mode over the near term.
Waiting in the weeds for regional risk sentiment is how Chinese authorities extend their attempt to tame the China Money Ball and avoid a credit bubble explosion. Overnight the Shanghai interbank overnight rate was nudged to 2.792 % culling liquidity in the interbank markets in their challenge to deleverage an overheated economy