Australian dollar breaks as commodity crash intensifies

Friday 5 May 2017

Some accelerating selling this afternoon headed into tonight’s US jobs report. Oil is getting creamed:

I’ll be looking to tonight’s US rig count with great interest. Basically I don’t think that this selling will stop until it does.

Base metals are falling too:

The culprit is still Chinese interest rates with bond yields moonshotting:

And interbank markets still very tight:

Strangely, Aussie bonds are also getting flogged and have been for a few days:

That sure ain’t going to last as iron ore collapses limit down again today with previous support swept aside at 470 yuan ($54.50):

Not surprisingly, the Aussie dollar has broken down to five moth lows:

Moreover, tonight’s US jobs report may be on hiding to nothing now. A good report and markets will get spooked by Fed tightening in June. A bad report and markets will get spooked that reflation is sputtering in the US as well. S&P500 futures are off a little:

But remain strong so far…

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.