GLOBAL POLITICAL RISK: Trump Tells Aides To Prepare For Extended Blockade - WSJ

The GBP/AUD range Friday night was 1.9273-1.9343, Asia is trading around 1.9345, +0.30%. The pair has bounced strongly from below 1.9000 as the AUD outperformance faces headwinds from positioning and a potential break lower in risk. The pair had a significant almost 14% pullback from this time last year so its not surprising to see some profits being booked in this environment. I suspect if this break lower in risk does evolve into a bear market then we could see a further paring back of AUD longs. The first resistance is toward 1.9400 and then the more important 1.9600-1.9900 area, where I would look for sellers to come back in at first attempt. Support on the day is back toward the 1.9250 area.

• The GBP/AUD Average True Range(ATR) for the last 10 Trading days: 138 Points

Fig 1: GBP/AUD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

While there are a number of data releases in Australia this week, the focus will be on Tuesday’s RBA March meeting minutes. They will be examined for further Board thoughts on the consequences on inflation and growth of hostilities in the Middle East and subsequent jump in fuel prices. A lot can happen geopolitically before the next decision on 5 May and the market currently has a significant chance of another hike priced in. 

• The RBA reiterated in its March statement that “credit is readily available to both households and businesses”. February data is released on Tuesday and forecast to rise 0.6% m/m after January’s 0.5% m/m & 7.7% y/y.
• February building approvals print on Wednesday and Bloomberg consensus is forecasting a 6.0% m/m rise after the volatile multi-dwelling component pushed the total down 7.2% m/m in January and 14.9% m/m in December.
• The final March S&P Global manufacturing PMI is published on Wednesday while the services/composite PMIs are not until Tuesday 7 April. The preliminary report showed that costs had risen at their fastest in over 3 years and that some of this was passed onto customers with selling price inflation at its highest since August 2023.
• On Thursday job vacancies for the 3 months to February print. The RBA monitors vacancy data closely. They fell 0.2% q/q 3-mths to November but unemployment decreased 1.3% q/q resulting in the vacancy/unemployment ratio rising to 50.2%. Unemployment was down 0.5% q/q in the latest 3-months.
• Thursday also sees trade data. The February merchandise surplus is projected to be fairly stable at $2575mn after $2631mn. 

Risk aversion away from earlier extremes as Trump headlines from his comments from Airforce One cross.

:"*TRUMP ON IRAN DEAL: COULD BE SOON
*TRUMP: I DO SEE A DEAL WITH IRAN
*TRUMP ON 20 TANKERS THROUGH HOMUZ: STARTING TOMORROW MORNING*TRUMP: IRAN CAME BACK TO US ON 15-POINT PLAN
*TRUMP: WE ARE GOING TO ASKING FOR A COUPLE OF OTHER THINGS
*TRUMP ON 15-POINT PLAN: IRAN GAVE US MOST OF THE POINTS" - BBG

US equity futures paring losses. Eminis are back to -0.45%, last near 6385, earlier lows were at 6360.25). Oil a little off session highs, but still up for the session. Brent is around $115.5 (still up 2.6%, while earlier highs were at $116.43/bbl). Higher beta plays in FX a little firmer, but AUD and NZD still down for the session. AUD/USD was last near 0.6855/60, against earlier lows of 0.6843).