DXY was down Friday night:
The Australian dollar was up against all comers:
Gold puked:
WTI is freefalling as Brent holds. Good job El Trumpo:
Dirt wants recovery:
Miners up:
EM stocks too:
The Fed is preventing junk from being crushed with oil:
Bonds were mixed:
Stocks to the moon as the momentum-chasing robots bid:
Westpac has the wrap:
Event Wrap
COVID-19 update: Latest data from John Hopkins University indicates 78k new confirmed cases worldwide on 18 April, vs 88k the previous day and vs 99k at the peak on 12 April.
US President Trump issued guidelines for states to consider as they decide whether to relax stay-at-home orders and other social-distancing measures. The document lays out a three-stage process and leaves many decisions to states.
Eurozone final March CPI was unchanged from its initial release of +0.7%y/y headline and 1.0%y/y core. Feb. construction contracted 1.5%m/m after a bumper +4.0%m/m rebound in Jan.
Event Outlook
New Zealand: Today’s major release is Q1 CPI. Westpac expects an increase of 0.4%, which would lift the annual rate to 2.1%yr and above the RBNZ target mid-point for the first time in three years. However, this print largely predates the lockdown, and a moderation is expected in coming months. In addition, PM Ardern will announce at 4pm whether the COVID-19 alert level will be changed from 4 to 3.
Euro Area: The February trade balance for the bloc is due. The January read saw the balance narrow to €17.3bn, largely reversing the upward trend of 2019.
US: The market expects the March Chicago Fed activity index to print at -0.62. With the index falling into negative territory, economic growth is running below trend.
As a pure proxy for risk appetite and global stocks, the Australian dollar jumped again, ignoring the avalanche of apocalyptic data. As such, let’s take a look at the state of stocks to see where the AUD goes next:
It is true to say that stock valuations can get stretched as they anticipate recovery. It’s normal to see multiple expansion at the beginning of a new cycle in this way:
The thing is, multiple expansion usually occurs as we exit recession not enter it!
A such, as robot momentum chasers drive up stocks valuations prematurely, we are equally seeing a crazed bid for the AUD into overvaluation.
Guess what comes next?
