Australian dollar hits new post-GFC low

See the latest Australian dollar analysis here:

Macro Afternoon

Nor sure why:

The bond bid is in again as well.

S&P futures turned south or maybe an investment bank just declared RBA action imminent.

Can’t find any obvious trigger (beyond the obvious).

David Llewellyn-Smith

Comments

  1. Anyone know why
    Guess it’s telling us
    BYE BYE AUSSIE LAND

    I’m telling you AUD will hit 30s in this cycle down

    As we now head into last 6 to 8 weeks into SOLAR MINIMUM
    AUSTRALIA is about to spiral vertically down
    Australia is headed into the greatest crash since 1930s
    Commodities are crashing
    AUD crashing

    The AUST BANKING SYSTEM is going to COLLAPSE this year and house prices will fall 50%

    The curtain has closed

    • SnappedUpSavvyMEMBER

      Macron called it a crisis? Europeans are leaving AUD, I don’t know, sunspots?

      its all pretty nasty way before April

    • I got to give it to you, sticking your b#### on the line, although many make the call, your timing is pretty remarkable.

      Good job, now what is your investment fund called and how do we join lol

      • Easy name: “Sunspot”

        and/or Nucleus Wealth can have a subsidiary, run by bcnich, called Sunspot.

        It can have a slogan: “We don’t know why this works, but it might just…”

        🙂

      • LOL
        I just do for myself
        I used to be a stock broker
        Customers are a pain in the arxe

        When you are wrong they scream at you

        And don’t worry I’ve had years I’ve been totally wrong
        No one is always correct

        I’ve just been correct on everything last 18 months

        I think everything I’m writing will be correct this time

        after that who knows

        Might hang the boots up

        Mark I got the AUD wrong last week, DLS was correct he said straight down, I thought a bounce to 67
        In past we would have had the bounce

        It’s like a lead balloon

      • Mark
        Think we may have one more night in the dow around down to 25,000
        I think If we see around there we will bounce higher before next leg down towards 20,000

      • WN
        solar minimum is estimated low 4/5 months either side of April – so we have the crash next few months
        I believe and then we are headed up into SOLAR CYCLE 25 around Q4, markets that crashed will start turning back up

    • Yeah but you’re missing the good news here:

      Every economist knows that the weaker your currency gets vs the USD the better your economy performs — don’t take my word for it, they teach this stuff in ‘good’ Universities (true story).

      Just a few years ago Aussies could buy US$1 for A$1, now the plucky Peso buys US$0.65! F*ck me it’s boom time! By the time the Peso is buying US$0.30 we’ll be the richest nation on the planet. Says so in the text books, bro. 😉

      • Yeah yeah. I know you’re trolling. But a lower AUD is a partial offset to a weak economy, not the cause of a strong economy. It helps with the recovery, over time.

        And I would like to see a very strong recovery kickstarted by an AUD in the 30s! 😉

        • I feel this strident need to troll the “we have to get poorer to get richer” meme. It cuts me deep that one.

          I understand the need for adjustments, but it ends up as a beggar thy neighbour arrangement where you all take turns to debase your currency vs the other. Where does that actually leave you in the end? Back at the start?

          It would be far better if the whole world were on the same currency, then the adjustments would have to internal (structural). No bad thing, let me tell you. We wouldn’t have an economy based on house flipping, I know that for sure.

          • I’m a fan of free floating currencies but yeah the manipulation is the big problem. Interested in your ideas that the market should set interest rates instead of CBS.

            Several countries sharing a currency has different issues though: see Euro. Probably worse unless you are the biggest dog in the room.

        • I don’t think a global currency can work at all – the Euro is a debacle and most countries would prefer to have the devaluation lever, even though it’s the coward’s way out. By that I mean, don’t bother with genuine reform, just devalue and pour yourself a G&T, which is what explicit devaluation is.

          By global currency, I’m referring implicitly to a gold standard, which is far from perfect but it definitely reins in the excesses that occur in a floating currency regime tethered to nothing whatsoever.

          • Yes – good points.

            I need to work out why the gold standard failed… I suppose partly there are just always those who really really want to be allowed to create money out of thin air.

          • I need to work out why the gold standard failed…

            It removes the state’s – and therefore the peoples’ – capability for self-determination.

            Your country is instead at the mercy of whoever has all the gold.

            On a more practical level, how absurdly wasteful is it to dig up a bunch of gold just to process it into bars and stick it in a vault ?

          • @Arrow
            The gold standard didn’t fail – it just became inconvenient to those managing the state apparatus. You cannot fund expensive wars and expansive welfare systems under a gold standard. A gold standard imposes discipline on government and this is extremely inconvenient for people who like to live on endless amounts of credit.

        • “I suppose partly there are just always those who really really want to be allowed to create money out of thin air.”

          This.
          Banks and banking would be a fraction of the size they are today without the ability to expand their balance sheets ad infinitum. Their frustration is only that Straya isn’t much bigger than it actually is – which is why the support for mass immigration.

    • Not sure if you are extracting the urine bcnich but Shit you near have me scared to get on the next plane to Ireland!

  2. Mining BoganMEMBER

    Scummo had a press conference? Don’t think there’s a lot of confidence in him from the rest of the world.

      • Mining BoganMEMBER

        Yeah, well you try telling my mum that. She’ll reverse roundhouse a franking credit fuelled frying pan at you!

        • F’me I have the same conversation with my mum and step father. Evil Shorten was gonna take those “hard working” franking credits.. I mean Boomers have worked hard all their lives, so they deserve their little treats. :). I said if we had Bill Shorten during the fires he wouldn’t have jetted off to Hawaii etc.. she didn’t want to hear it. 🙂

          • In-laws are in North West Melbourne (Broady area) and my mum is based in South Melbourne (city) and Kinglake area (Country). I’m in the middle, so about 30 mins away from inlaws and my own folks. I think it’s not too far, not too close. So just right. 🙂

          • BoomToBustMEMBER

            Your in the next suburb to me, good place to be when you need to get out if town depending on which side if the bridge you live. There are a few other ways across the Yarra though if you know where look.

    • I got to admit. I’m more than a little keen to know if this farking thing spreads during warmer weather.

    • Be interesting to see how CoVid goes in Africa. It’s a fvcken viral cesspool at the best of times.

        • “Emerging infectious diseases in Africa in the 21st century”

          Abstract
          Many infectious diseases have emerged or reemerged in Africa in the 21st century. Some of them are associated with newly discovered microorganisms such as Rickettsia felis and Tropheryma whipplei; others are known, historical diseases such as plague and cholera. In addition are diseases related to previously known microorganisms which recently have been involved for the first time in massive outbreaks with worldwide impacts (such as Ebola virus, Zika virus and Chikungunya virus). Research on emerging infectious diseases needs to be identified as a priority.

          https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6205565/

      • Sort of like how it’s interesting to imagine the entire Chinese Air Force crash landing into a fuel depot. Very interesting, but the basic outcome is never in doubt.

    • And that makes sense because gobs of liquidity cannot beat a pandemic and it doesn’t make insolvent companies solvent.

      Once that reality sets in it’s time to panic

  3. Cant wait for work to do the whole work from home thing. Will be a great time to get some more of my home reno’s done mid-week. Even bought a dedicated webcam so I can I can you know make some extra cash on side doing cam shows of my builders crack.

    • Disagree – rises will be from AUD/USD changes, not debt-related (which is what IRs target).

      I assert that they/RBA are generally concerned with new debt-related/generated money entering the system and causing inflation, hence the IR lever.

      I think they will look-through exchange-rate-based ‘inflation’ on this basis – but also because raising IRs would also tear out what guts remain in the Australian economic carcass….so they just won’t raise rates…in fact, it they will target the opposite via QE.

      Also, don’t forget that inflation/CPI is an aggregate: some things will go up from exchange-rate based changes, but demand will also be reduced, which is deflationary…

      My 22222 cents

      • Stimulatory measures (in and out of Aus) after the GFC (when bad news was still bad news) led to years of higher rates.

        Corona can’t be QE’d.

        And central banks could decide to unwind their piles of putrid waste now, avoid a decade of blame, put it all on COVID.

        Rates could rise. Oh yes.

        It’s a shock to think about it.
        But everyone needs to wake up to the real possibility.

        • I’m often in the camp your speaking from….but I think the camp is underestimating the hit to demand and, therefore, the deflationary impact via crushed debts, decreasing wages, etc, etc, etc.

          So, yes, we can get inflation in a few things, but the debt overhang provides a massive deflationary tide that even large money printing will struggle to overcome.

      • Interest rates have primarily been used as a target on inflation – NOT DEBT. The main tool of the RBA, interest rates – is all about managing the economy and managing inflation comes waaaaaaaaaaaaaaaaaaaaay before stimulating the economy via cheap / expensive credit.

        Inflationary AU FX will mean higher interest rates – 1000 times before debt.

        .

        • You’ve got it the wrong way round – it’s debt service costs before inflation. They couldn’t give a rats about inflation – they need inflation to eat into the unpayable debt-berg.

          Paul Volcker was the last central banker to care about inflation – but then he didn’t have a debt mountain to contend with. The next central banker who is confronted with a real inflation problem will be trapped between a rock and a hard place. In other words, game over.

  4. TBH, i’m actually now glad i live in HK…was talking to my mates the other day and we were discussing options but there are few, except that HK is so much better prepared as hospitals etc used to pandemics…people are more considerate, everyone wears masks, handwash everywhere even in 7/11’s etc, people take way better precautions…went to bank and was given a mask buy the staff…EU to lazy and too spread out, aus the same and US could go nuts as they are all armed freeks…!

  5. – Bunch of big fish just had to reposition realising pandemic bonds and related derivatives are soon to be toast?

    – Damien’s corona research ranking so high on Google that an Algorithm followed the dark path to the rest of the content on the MB website?

  6. I orchestrated this as I have a pile of USDs to bring back to fund my new home on an island in Aus. 🙂
    BTW, we’ll blow the road bridge and live off fish, crabs, prawns, dugongs and turtles if the virus gets out of hand down under.

    • The dugongs and turtles will take care of the subsistence needs.

      To get RICH on the island, though, you’ll need to do some value-add activities. Give each other haircuts and sell each other coffee, perhaps?

      When the kiddies grow up a bit, maybe allow them to borrow money from you (at interest) to buy a small patch of your back yard….

  7. NEW ZEALAND …

    Our currency takes a hit on rumours that Covid-19 has arrived. Wholesale swap rates sink as well … David Chaston … Interest Co NZ

    https://www.interest.co.nz/currencies/103844/our-currency-takes-hit-rumours-covid-19-has-arrived-wholesale-swap-rates-sink-well

    (Don’t forget the $NZ 1.2 trillion housing market with about $NZ 700 billion of bubble value in it. Its going to be a very rough trip falling off 7.0 Median Multiple on the road to about 2.8 Median Multiple … refer this years Demographia Survey http://www.demographia.com. Remember Ireland ’07 ? )

  8. RBA has been intervening in the Australian dollar for months – years.

    That has just been broken.

    • St JacquesMEMBER

      Yeah the Aussie always seemed to have strange recoveries on the most dodgy of numberwangs after a sustained bad run the last few years. Always did look a bit odd, since it happened more than a few times.

  9. JUSTIN CARSLAKEMEMBER

    I used to read the comments on MacroBusiness and see some sensible balanced remarks .
    I used to read the comments on doomsday preppers for my doomsday comments
    When I read doomsday preppers comments and they seem happy and are saying that this is what they have been waiting for
    I’m starting to get a little bit concerned
    Like buying toilet paper and canned food concerned

    • St JacquesMEMBER

      Fair enough. I indulge in a bit of dooming myself, but the AUD has been strong coz the terms of trade have been exceptional and fro a time. Question is will this revert to the long term mean slow or fast and what will that mean for a narrowly based economy that has leveraged itself up to the eyeballs on the back of a massive commodity boom?