Australian dollar universally sold with commodities

DXY was down last night as EUR rose and CNY fell:

The Australain dollar was dumped anyway:

As gold fell:

And oil:

Plus metals:

And miners:

EM stocks flamed out:

Junk fimed:

US yields eased:

Bunds eased:

Aussie bonds were bought:

Stocks edged down:

Westpac has the wrap:

Event Wrap

Brexit Party leader Farage said that they would not stand in existing Conservative seats. Although this still means that votes may be split in marginal seats, the news reduced the market’s concerns over another dysfunctional minority or a hard-left Labour led coalition.

UK 3Q GDP at +0.3%q/q (est. +0.4%q/q) was slightly disappointing but avoided a technical recession. Most components were skewed to the downside though business investment was, surprisingly, not as weak as expected (-0.6%q/q, est. -1.1%q/q) and exports were firm (+5.2%q/q, est +2.9%). September production data was overall soft; GDP of -0.1%m/m meeting expectations, but industrial (-0.3%m/m, est. -0.1%m/m) and manufacturing (-0.4%m/m, est. -0.2%m/m) production soft. The trade deficit widened in Sep to –GBP3.36bn (est. –GBP2bn).

Event Outlook

NZ: The RBNZ’s 2yr-ahead inflation expectations survey fell from 2.01 to 1.86% in Q3. A material move in Q4 could influence the RBNZ’s OCR decision on Wed.

Australia: Oct NAB business survey last showed conditions at +2, a still soft level with no signs yet of a stimulus boost.

Europe: Nov ZEW survey of expectations is released.

UK: Sep ILO unemployment rate is expected to hold at 3.9%.

USPresident Trump speaks at the Economic Club of New York. Fedspeak involves Clarida on “Monetary Policy, Price Stability, and Bond Yields” and Harker in New York.

The data continues to support the status quo of a weak AUD. Europe cannot get off the canvas as the ECB pushes on a string:

German industry is toast:

Like, universally:

It is spreading to the periphery in Spain:

And Ireland:

Jobs are next:

The US is also fading:

But it’s consumer is much better as wages rise:

Along with the silver bullet of the housing maarket:

Recession fears are declining now:

It still favours the USD over EUR which is set up for an ongoing weak Australian dollar, exacerbated by general global weakness and a sagging China expressed in falling commodity prices.

Houses and Holes

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.

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Comments

      • Will be interesting to see how it goes in times of high debt. From what I remember everything was 8%……cash rates, gov. bonds, unfranked dividend yields…..after that it got out of control and Mr Keating had to do a Volcker because Mr Howard was an incrementalist like this lot……somehow having trouble seeing Mr Lowe doing that.

    • normal behavior by employers. in slow times they tend to hold on to trained labour for while so hours worked will go down first. if economy slows further down then layoffs will kick in, followed by recession.

  1. Nickel prices got smashed. Few days ago WSA got as high as $3.40 when Indonesia announced they wills top Nickel exports. Yesterday WSA closed at $3.06 as Indonesia changed its mind (lol as expected) and Nickel prices started to fall. Today WSA will probably fall below $2.95.
    I am really keen on WSA and MCR but only if their prices come down to around $2.50 and 45c-50c.

    • I sold half my MCR in the high 60’s, but yes, will only buy back in a lot lower. Next year maybe. Once the US economy finally flames out.