Solid gold Australian dollar outshines all

See the latest Australian dollar analysis here:

Australian dollar baulks at swooning greenback

DXY rallied last night:

But that couldn’t stop the solid gold Australian dollar against DMs:

And EMs:

Actual gold tumbled:

As did oil:

Base metals were mixed:

EM stocks flamed out:

Junk is still OK:

The Treasury curve steepened for once:

Bunds went the other way:

Stocks flamed out:

A range of tidbits combined to lift DXY including: strong PCE income and Dallas Fed; ECB jawboning slow QE withdrawal and NAFTA no progress. Most currencies corrected.

But nothing can stop the Australian dollar right now. Not the incipient Chinese slowdown and bulk commodity correction, the gasping consumer, the falling house prices, nor the fiscal lifeline economy. Markets seem to have taken it their heads that an Aussie boom is imminent, selling off bonds and bidding the currency well ahead of other DMs.

The next test of the reality versus the hope comes tomorrow with the December QTR CPI. Consensus is pretty high at 0.7%. The signs are mixed with higher petrol offset by weak consumption and heavy discounting. The monthly series was a cumulative 0.6% for the QTR and fading:

Given the very weak NZ number I’ll take the under.  With the Aussie as taught as a drum, it’ll need to be a very solid number to support it.

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David Llewellyn-Smith is chief strategist at the MB Fund which is currently long international equities that will benefit when the Australian dollar falls so he is definitely talking his book.

Here’s the recent fund performance:

Source: Linear, Factset

The returns above include fees and trading costs on a $500,000 portfolio. Note that individual client performance will vary based on the amount invested, ethical overlays and the date of purchase. The benchmark returns do not include fees. October monthly returns are currently at 4.9% for international and 4.2% for local shares.

If the themes in this post and the fund interest you then register below and we’ll be in touch:

The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. The MB Fund is a partnership with Nucleus Wealth Management, a Corporate Authorised Representative of Integrity Private Wealth Pty Ltd, AFSL 436298.

David Llewellyn-Smith
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Comments

  1. Think AUD is driven by external factors
    Weak USD is pushing up commodity prices and AUD by default
    Until USD finds some strength inflation and economic figure locally are insignificant
    There is AUSUS int rate differential and that might help keep a lid is the AUS 10 year drifts lower and US 10 year heads towards 3%