Australian dollar sickens with euro

See the latest Australian dollar analysis here:

Macro Afternoon

DXY looks like it’s primed for breakout as EUR free falls:

The market is not especially short EUR. There’s room to fall:

The Australian dollar was universally panned Friday night:

It alos has rooom to fall further in terms of CFTC positioning:

Gold also looks primed for higher:

Oil is trying. Too early for mine but the contango is helping:

Metals fell:

Miners too:

EM stocks fell:

Junk remains impeturbed:

Bonds were bid:

Stocks flopped into green:

Westpac has the wrap:

Event Wrap

US retail sales rose 0.3% in Jan, as expected, although the prior month was revised 0.1ppt lower. The core control group was unchanged (vs +0.3% expected) and also revised lower in Dec. Industrial production fell 0.3% in Jan (vs -0.2% expected). Consumer confidence (Univ. Mich.) rose from 99.8 to 100.9 and beat expectations, while the 5-10yr inflation expectations component slipped from 2.5% to 2.3%. The mix of data suggests downside risks to GDP forecasts for Q4 and Q1.

Event Outlook

In NZREINZ housing data is due this week for January. The supply of homes is tight, while low interest rates are supporting demand, resulting in robust price growth. BusinessNZ services PSI for January, and December net migration are also due.

Japanese GDP is expected to contract sharply in Q4 as a result of weak consumption. Q1 will then be impacted by the coronavirus outbreak.

In the US, markets are closed for Presidents Day.

The basci set up is unchanged. The US is powering on easy money for housing:

Whie Europe is barely out of recession and is about to feel the full force of the COVID-19 demand shock:

With German industry driving off a cliff.

While that happens, the Australian dollar can only go lower as DXY roars.

David Llewellyn-Smith

Comments

  1. We need to watch EURGBP
    If that falls fast to 80, it’ll push DXY above 100
    Keep an eye on £

    Post Brexit move into GBP

  2. HNH is correct above.
    Germany is the back bone of Europe and it’s going off a cliff.
    EU has been screaming that UK will be finished but money is pouring into UK from Europe and not so much Switzerland, CHF has been falling against the USD in these moves.
    Once other EU nations start realising that UK is going to benefit from leaving the Euro, other EU nations have been told the opposite would happen
    You wait……

    Gold is up but market is very long and if USD does break 100 and starts running up 105/110, think all commodities inc gold will be sold off.

    Let’s watch over the next few weeks to see what happens to Eur and DXY.

    Think if breaks 100, it could be off to the races.

  3. US Masters Residential Property Fund (URF) share price has decreased markedly over the short term because of debt issues. Their assets are in New York and New Jersey. They are trying to sell some of their housing stock to reduced their debt but they say that prices are low because of the growing supply in New York and the demand is not keeping up.

    • They obviously haven’t been lobbying the politicians………. increased supply would never happen in Australia.

    • New York real estate has been struggling for some time now.

      Honestly, it all feels very toppy. $260 trillion of global debt and diminishing means to service it all. Now that China is off line for a while, some marginal corporate players should fold — followed by a spike in unemployment. Can’t see it any other way. The only mystery is credit/HY is un-moved (for now).