HomeContributorsFundamental AnalysisAUD/USD Drops After Warning Related To Sovereign Rating

AUD/USD Drops After Warning Related To Sovereign Rating

General Trend:

  • Australian financials drop; APRA (Aussie regulator) said it expects financial firms to limit discretionary capital distributions in the months ahead
  • Japanese equities rise; Sectors moving higher include Securities, Electric Appliances and Insurance
  • Japan Exchange: Markets will remain open during state of emergency
  • Shanghai Composite declines by less than 0.5% in early trading as financials move generally lower
  • Hang Seng underperforms; Declining sectors include tech, property, energy, telecom and financials
  • Wynn Macau guided Q1 revenues down over 40% y/y (based on mid-point of guided range)
  • US Fed FOMC minutes from March 15th meeting due for release later on Wed (April 8th)
  • US VP Pence: CDC will have new guidance on Wed (April 8th) on quarantining and how someone may be able to return to work

Headlines/Economic Data

Australia/New Zealand

  • ASX 200 opened -0.4%
  • (AU) Fitchs cuts Australian banking sector names one notch from AA- to A+; Outlook negative, citing coronavirus risks
  • (AU) AUSTRALIA FEB HOME LOANS M/M: -1.7% V 2.0%E; INVESTMENT LENDING M/M: -1.9% V 1.5%E; Owner Occupied Loan Value m/m: -1.7% v +2.8%e
  • (NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +1.2% v -3.9% prior
  • (AU) Australia regulator APRA issues letter to banks: Banks and insurers have a critical role to play in supporting Australian households, businesses and the broader economy during this period of significant disruption caused by COVID-19
  • (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$87.0B v A$84.8B prior
  • (NZ) Reserve Bank of New Zealand (RBNZ) Assistant Gov Hawkesby: Open to increasing QE in a rapidly evolving situation, there is a limit to how much of bond market RBNZ can buy, considering other assets for QE, linkers are on the list
  • (NZ) Reserve Bank of New Zealand buys NZ$600M in Govt bonds v NZ$600M indicated
  • (AU) S&P: Cuts Australia sovereign outlook to negative from stable; Affirms AAA rating; S&P comments: We expect the Australian economy to plunge into recession for the first time in almost 30 years, causing a substantial deterioration of the government’s fiscal headroom at the ‘AAA’ rating level.
  • (AU) Australia PM Morrison: 700K businesses have registered for JobKeeper wage subsidy program; Australia has 5,956 coronavirus cases, 2,547 recovered
  • (AU) Australia sells A$2.0B v A$2.0B indicated in 5.50% April 2023 bonds, avg yield 0.2489%, bid to cover 4.89x
  • (NZ) New Zealand Apr Prelim Business Confidence: -73.1 v -63.5 prior
  • (AU) Reserve Bank of Australia (RBA) offers to buy total of A$2.0B in bonds v A$2.0B prior; Offers to buy semis Apr 2021 to Dec 2024

Japan

  • Nikkei 225 opened +0.5%
  • (JP) Japan Feb Current Account Balance (BoP): +¥3.17T v +¥3.07Te; Adj Current Account: +¥2.38T v +¥2.03Te; Trade Balance (BoP): ¥1.37T v ¥1.22Te
  • (JP) JAPAN FEB CORE MACHINE ORDERS M/M: +2.3% V -2.9%E; Y/Y: -2.4% V -3.0%E
  • 7974.JP Reportedly has suspended shipments of the Switch game console in Japan amid supply chain disruptions and demand surge caused by COVID-19 – Nikkei
  • (JP) Japan Exchange: Markets will remain open during state of emergency
  • (JP) Bank of Japan (BOJ) to continue to provide essential banking services; taking emergency measures per law while reducing some operations

Korea

  • Kospi opened -0.5%
  • (KR) South Korea President Moon: Announces additional KRW53.7T stimulus package plans
  • Korea Air, 003490.KR Will start 6-month work stoppage for 70% of its employees, effective April 16th, as part of steps to deal with coronavirus; will raise funds by selling more non-core assets
  • (KR) South Korea National Election Commission (NEC): overseas citizens mail in votes for upcoming parliamentary election are lowest on record due to coronavirus, only 40.8K voted of the ~172K eligible to vote – Yonhap
  • (KR) South Korea Mar Bank Lending To Households (KRW): 910.9T v 901.3T prior (fastest rise since data started being tracked)

China/Hong Kong

  • Hang Seng opened -0.3%; Shanghai Composite opened -0.5%
  • (CN) China National Health Commission Coronavirus Update for April 7th: 62 additional cases v 32 prior; Additional deaths: 2 v 0 prior; Additional Asymptomatic cases 137 v 30 prior
  • (HK) Hong Kong expected to provide HK$30B in small business relief measures – China press
  • (CN) China PBOC sets Yuan reference rate: 7.0483 v 7.0939 prior
  • (CN) China PBoC Open Market Operation (OMO): Skips Reserve Repo Operations for the 5th consecutive session; Net CNY0B v drain CNY70B prior
  • (CN) CHINA MAR FOREIGN RESERVES: $3.061T V $3.098TE (after the close); SAFE comments: Domestic real economy is improving steadily, which will help keep its forex reserves stable overall
  • (CN) Wuhan City lifts outbound travel limits after 76-day ban – Xinhua
  • (CN) China State Council: China will establish new pilot zones for cross-border e-commerce, support the processing trade and host an online Canton Fair to stabilize foreign trade and investment amid the coronavirus pandemic; will continue preferential tax policies for inclusive financial service and micro-loan companies in a bid to help small- and micro-businesses, self-employed individuals and farmers – Xinhua
  • (HK) Hong Kong to order closure of beauty parlors and massage facilities; extends social distance measures to April 23rd (prior Apr 11)

Other

  • (IR) Iran Oil Min: Iran does not agree with holding any OPEC+ meeting without having a “clear and consensual outcome” to oil market; vague circumstances around upcoming OPEC+ meeting is “of grave concern”; volume of oil production cut and duration, cuts by US and Canada baseline level and distribution of cuts should be addressed before meeting

North America

  • (US) Weekly API Crude Oil Inventories: +11.9M v +10.5M prior
  • AMZN Reportedly to suspend its own delivery service that had competed with UPS and Fedex; Amazon to focus on own customers’ orders – press
  • (US) President Trump: Looking at opening the economy soon, we’ll be open again much sooner rather than later – Interview on Fox
  • TSLA Said to have implemented paycuts, furloughs, and targets resumption of production by May 4th – Financial press

Europe

  • (UK) 66% of those polled think the UK should extend its EU transition deal into 2021 amid coronavirus – press

Levels as of 1:15ET

  • Hang Seng -0.5%; Shanghai Composite -0.1%; Kospi +0.7%; Nikkei225 +2.2%; ASX 200 +1.3%
  • Equity Futures: S&P500 +1.0%; Nasdaq100 +1.2%, Dax +2.1%; FTSE100 +0.0%
  • EUR 1.0902-1.0859; JPY 108.97-108.50; AUD 0.6178-0.6123; NZD 0.5984-0.5941
  • Commodity Futures: Gold +0.2% at $1 ,686/oz; Crude Oil +6.1% at $25.07/brl; Copper +1.3% at $2.28/lb
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