Just when you think it’s safe to short AUD…

See the latest Australian dollar analysis here:

Macro Morning

It was all going so well with bonds bid and the AUD sinking on weak fiscal stimulus and then along comes booming retail sales. There was also a beat on the trade balance and this at the FT:

Top US and Chinese officials have resolved most of the issues standing in the way of a deal to end their long-running trade dispute but are still haggling over how to implement and enforce the agreement, people briefed on the talks have said.

Liu He, China’s vice-premier, was preparing to meet Robert Lighthizer, the US trade representative, and Steven Mnuchin, the US Treasury secretary, for a potentially climactic negotiation session starting Wednesday in Washington. The talks are the latest in a series of meetings over the past four months.

Although an agreement was within reach, the two sides remain apart on two key issues — the fate of existing US levies on Chinese goods, which Beijing wants to see removed, and the terms of an enforcement mechanism demanded by Washington to ensure that China abides by the deal.

Suddenly boom:



Just one of those things, nothing happens in a straight line. After an austere Christmas consumers came back to life. So much for NAB’s useless online retail sales indicator!  Still, it doesn’t change the outlook much. The trend is still weak and in decline at 0.2% for the month, which is the more important measure for range forecasting. Trade surpluses are baked in until bulks fall. The trade deal is neither here nor there for me. If it comes China will ease up on stimulus anyway.

Big Iron is unstoppable:

Big Gas is soft:

Big Gold is firm:

Big Banks weak:

Big Realty strong as RBA cuts firm:


David Llewellyn-Smith


  1. I can’t see a comments box on Damien K’s excellent article on bonds today (?).

    Anyway, he said “Australian dollar: The lower it goes the more likely we are to close out bond positions”.

    Why is this? Would not the lower AUD result from conomic weakness, which means hold bonds? Or is it that a lower AUD means weakness is closer to fully priced and there’s not much upside left for bonds?

    Genuine question 😁