Australian dollar charges on whatever

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Yes, it’s back, the indomitable Australian dollar, safe harbour (not haven) interest rate harbinger and play thing of global speculators. It’s broken out and is running. From Credit Suisse:

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AUDUSD has rallied back towards the top of the current range, and a clear move above .9105 should open up a retest of the key resistance zone at .9136/50 – the falling 200-day average and early March high. A break above here is needed to reinforce a basing story, clearing the way for further strength to .9206/08 initially, ahead of .9269 and eventually our .9410/.9510 target.

Near-term support moves to .8992. Support at .8972/68 ideally holds to keep the immediate risk higher. Below can see a retest of .8936/26. Below here and .8890 is needed to negate a basing story, for .8730.

Why last night? Broader markets were mixed. The US dollar was flat. Stocks roared and but bonds were also flat. Gold tanked 1% as our Vladimir:

…moved to annex the breakaway Ukrainian region of Crimea but sought to reassure Ukrainians by saying Moscow has no further designs on its southern neighbour’s territories.

In a defiant Kremlin speech to both houses of parliament and top government and civic officials, Mr Putin dismissed sanctions and threats of other consequences by Europe and the US, saying the West had “crossed the line” by fomenting what he called a “putsch” in Kiev earlier this year.

“Crimea is our common property and a very important factor in the stability of the region,” he said. “This strategic territory should be under a strong, sovereign state and that in fact can only be Russia.” Leaving Crimea in Ukrainian hands, he warned, could lead Sevastopol, the port that is home to Russia’s Black Sea Fleet, to become a harbor for the North Atlantic Treaty Organisation.

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There was no broader taper taper impulse, either, with decent US data. Housing starts came in soft but permits were better. Charts from Calculated Risk:

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Housing Starts:Privately-owned housing starts in February were at a seasonally adjusted annual rate of 907,000. This is 0.2 percent below the revised January estimate of 909,000 and is 6.4 percent below the February 2013 rate of 969,000.Single-family housing starts in February were at a rate of 583,000; this is 0.3 percent above the revised January figure of 581,000. The February rate for units in buildings with five units or more was 312,000.

Building Permits:Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,018,000. This is 7.7 percent above the revised January rate of 945,000 and is 6.9 percent above the February 2013 estimate of 952,000.Single-family authorizations in February were at a rate of 588,000; this is 1.8 percent below the revised January figure of 599,000. Authorizations of units in buildings with five units or more were at a rate of 407,000 in February.

There is enough there to fuel expectations of a post winter bounce. Inflation data was soft:

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According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.2% annualized rate) in February. The 16% trimmed-mean Consumer Price Index also increased 0.2% (1.9% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.1% (1.2% annualized rate) in February. The CPI less food and energy increased 0.1% (1.4% annualized rate) on a seasonally adjusted basis.

So, taper to proceed and the Australian dollar went up anyway. Macroprudential now!

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.