Australian dollar crashes below 69 US cents

See the latest Australian dollar analysis here:

Macro Morning

by Chris Becker

Not a good night for Australian dollar bulls with the Pacific Peso kicked down below 69 cents against the USD in what at first glance looks like a technical move:

The risk proxy AUDNZD pair was also hit hard, moving to a new monthly low, surpassing the July 2019 terminus:

Looking at the longer term charts of the Kiwi cross is shows something is brewing, with the course set for a six year low, but moreover indicating that the February RBA meeting is firming for another rate cut.

The interest rate market is now signalling a near 60% chance of the RBA cutting from its current 0.75% and heading below 0.5% in February, as the macro data continues to deteriorate even before the impact of the current and future bushfire season is taken into account.

Watch out below!

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Comments

  1. wont the bushfires boost economic activity, as people will be forced to spend, and insurance companies will be forced to pay out, and the government will be forced to deficit?

    broken windows and all that

    • The RBA will look through it (and house prices, insurance, utilities, rego, transport, food etc). They are determined to have a go at negative int rates.

      • happy valleyMEMBER

        Yep, the RBA happy clappy angels of death want to send as many savers over the cliff as they can? The right thing to do you know.

    • maybe but it’ll be over a long time, there will be months of insurance companies trying not to pay.

  2. Central bankers and their ‘models’.

    When rates are -0.5% and the economy is dying on its feet, the overpaid cretins at Martin Place will gaze at their models for answers and the models will tell them quite clearly:”Lower teh rates!”

    At what point does an averagely intelligent person realise that actually the models might be wrong? That the theory that informs the models might be wrong? Einstein said that the definition of insanity is doing the same thing over and over and expecting a different result. Well, this is modern economics for you – replete with faulty theory that is currently railroading us toward certain economic disaster.

    • Dom
      Do you know what’s going on with Aussie 10 year bond. Yield has fell very sharp over the last 3/4 trading days 1.42 high to 1.15% this morning
      Any idea?

      Can I add another question, AUD did look technically that it was due for a sell off but seems to have fallen quite a bit, maybe too far 7020 to 6860 around
      Do you think we may get a bounce off 6850

      • Nothing specific beyond acknowledging further economic weakness ahead, global slow-down, further CB rate cuts etc.

        We’re back to this liquidity glut situation again – between the Fed, the ECB and the BoJ they are printing $100bn a month. Staggering sums and they have to go somewhere. Now, the Fed has 3 term repos maturing this week so it’s worth keeping an eye on whether they roll them or not. That would be a lot of liquidity to leave the market in a short space of time. I suspect they’ll roll them but let’s see.

          • Frisky Iranians!

            Just imagine if the Dow dropped 2,300 pts – that would still only be an 8% fall. I’m looking for 50-60% once the next bear concludes. Valuations are just insane.

    • +1 I agree that RBA will go negative too.
      What ever is the responsible thing to do, they’ll do the opposite

    • happy valleyMEMBER

      The RBA happy clappies are the absolute smartest people in the room – just ask them.

  3. Fun fact:
    $AMD (stock) now trades at triple its dotcom mania peak valuation with revenue growth today roughly half of what it was back then.

      • Outstanding shares have been increasing steadily for years:

        440 million at the end of 2005 ….. 1.064 billion today.

        The mitigating factor is likely to be profitability. It was probably loss-making during the Dotcom boom and profitable now

  4. USD not moving at all
    all equities oil and gold, and bond yields

    Wouldn’t be surprised to see the DOW bounce out of here pretty convincingly
    Let’s see

  5. ErmingtonPlumbingMEMBER

    If we can get it down to 50c Imagine how easy it’ll be to maintain 10% per annum increases in nominal house prices!
    Average Sydney property prices to 2 million with fleeing Chinese capital thinking it a bargain!