Australian dollar falls on vaccine rumourtage

See the latest Australian dollar analysis here:

Macro Afternoon

DXY was still soft last night:

The Australian dollar broke out then flamed out:

Gold is still hovering:

Oil fell:

Dirt was firm:

Miners too:

EM stocks rolled:

But junk powered on post-Powell:

Bonds were bid:

Stocks fell:

Westpac has the wrap:

Event Wrap

COVID-19 update: The global case count, according to the latest data from John Hopkins University, indicates 88k new confirmed cases worldwide on 18 May, vs 80k the previous day. Whereas in March daily cases accelerated, in April and May they have trended sideways. Although cases in much of Europe and the US are rolling over, cases in, Brazil and India are accelerating.

Fed Chair Powell and Treasury Sec. Mnuchin affirmed their current policy stances but added little as they appeared in Congress. “We are committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response,” Powell said to the Senate Banking Committee. He also said the scale and speed of the downturn “are without modern precedent and are significantly worse than any recession since World War II.”

US April housing starts slumped -30%, close to the -26% expected. The level of permits fell less precipitously, -20.8%.

ZEW May surveys for Germany and Eurozone showed deeper declines in current conditions (-93.5 and -95.0, prior -91.5 and -93.9), but expectations surged to the highest levels in five years (+51.0 for Germany, est. 30.0, prior 28.2; +46.0 for Eurozone, prior 25.2).

The more timely components of UK employment report recorded a record rise in jobless claims of 856.5k in April to 5.8% (from 3.5%).

Austria opposed the Merkel/Macron EU rescue fund proposals. Austria, Netherlands, Denmark, Sweden, and Poland, are opposed to EU grants, rather than loans, to support struggling EU member nations, and are also opposed to the shared fiscal responsibility of EU bonds.

Event Outlook

Australia: The day will open with the Westpac-Melbourne Institute leading index. The growth rate of the index fell to -2.47% in March, which is consistent with a deepening economic impact from the virus. The April update is set to be much weaker and will be dominated by the 9.2% decline in hours worked. Following this, the ABS will release the preliminary estimate for April retail sales, and Westpac is looking for a fall of 15%.

Japan: March machinery orders are expected to fall by 6.8%, reflecting weaker investment in the face of extreme uncertainty.

Euro Area: The consumer confidence index is set to fall to -23.7 in May, which would approach the all-time low of -23.9 seen during the GFC.

UK: The market expects that CPI growth will remain sluggish at 0.1% in April.

US: The Federal Reserve will publish the Minutes of the April 29 policy meeting. Following this, the FOMC’s Bostic (00:00 AEST) and Bullard (02:00 AEST) will speak.

The market fell late after Moderna was exposed. Hoocoodanode:

Heavy hearts soared Monday with news that Moderna’s Covid-19 vaccine candidate — the frontrunner in the American market — seemed to be generating an immune response in Phase 1 trial subjects. The company’s stock valuation also surged, hitting $29 billion, an astonishing feat for a company that currently sells zero products.

But was there good reason for so much enthusiasm? Several vaccine experts asked by STAT concluded that, based on the information made available by the Cambridge, Mass.-based company, there’s really no way to know how impressive — or not — the vaccine may be.

While Moderna blitzed the media, it revealed very little information — and most of what it did disclose were words, not data. That’s important: If you ask scientists to read a journal article, they will scour data tables, not corporate statements. With science, numbers speak much louder than words.

Can anyone spell “rumourtage”. Much more here. We still think a vaccine is unlikely at all.

Finally, somebody else had noticed that all that matters to the Australian dollar right now is US stocks:

And stocks are totally disconnected from reality.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)


  1. When you have Australian experts saying it’s likely a vaccine will be found (Frazer) then I’ll put my money on them

      • Watch out, so you don’t get flattened as the AUstrailiaiinian Dollah falls ….to about the top of the recent range of 65c

        • They’ve really got me baffled from a trading point of view too. All this “waiting for a better chance to go short”. It’s rallied from 55.5 to 65.7. Why wouldn’t you just go long?

  2. how are y’all playing the inevitable decline in the asx and AUD? Puts? Buy usd? Gold?

    I would have thought give it another 3 weeks for infections to soar across the UK eu and usa

    • Goldstandard1MEMBER

      Cash and options could be the go. Gold I’m still 50/50 on and comes back to the same point. It’s a great hedge against inflation but I’m not rich enough for it to play a major role. Also deflation over inflation is more likely in my mind at the moment.

  3. Big announcements, lots of secrecy, no public access to data. Elizabeth Holmes is looking on wistfully.

    • happy valleyMEMBER

      She set the benchmark – convincing lots of people (including profile ones eg George Schultz whose nephew off memory worked for her and was calling her out in the end, but with the uncle still believing in her) for a very long time.

    • The Elizabeth Holmes episode nearly killed me — the progressive Left were fawning all over this ‘female Bill Gates’, vomiting thousands of sugary words about how great she is — and they were correct: a great FRAUD.

      Afterwards …. crickets from the same media.

  4. GeordieMEMBER

    We still think a vaccine is unlikely at all.

    A vaccine is inevitable as we routinely produce vaccines for viruses year in, year out. Given Covid-19 isn’t genetically stable and likely to be with us for a long time, it will be pursued doggedly until we have a “flu jab” equivalent; given the free advertising the virus has done for any company that can produce one there is considerable economic incentive to develop it too.

    Having a vaccine pop out of the woodwork and begin human trials shortly thereafter is unlikely (to say the least). While a therapeutic treatment (like that spruiked by Moderna) is also possible, it’s equally a long shot.

    • I think one of the major issues with a vaccine is that corona viruses are notoriously hard to make vaccines for (I believe I heard that there are not any vaccines for any corona viruses…). Apparently influenza is much easier to make a vaccine for.

      I think a treatment will be developed before a vaccine. (eg. hydroxychloroquine, maybe with zinc supplement, etc).

      If there is a good-quality successful treatment trial, stocks will go to the moon, gold get smashed, etc (at least for a month or a few).

      My 2c

      • There are successful coronavirus vaccines for animals. The only one that failed was FIP vaccine due to immune cell involvement in that virus. Until SARS there was no dangerous human coronavirus to justify vaccination. Cold coronavirus infection mostly happens in children, consistent with lasting immunity in adults, although 10% seem to be able to get reinfected. The biggest issue for this vaccine is safety. So far there is nothing alarming at the low and medium dose levels.

  5. BrentonMEMBER

    Corelogic has pulled the daily indices after house prices started going negative:

    Due to the evolving COVID-19 situation, CoreLogic will suspend the daily online publication of the Hedonic Home Value Index, as we continue to observe material reductions in the volume of property transactions underpinning the index, creating additional volatility in the daily reading. A robust volume of timely sales evidence is a critical component of accurately estimating the value of residential properties. The monthly results of the index will continue to be reported, but should be interpreted with some caution until transactional activity returns to more normal levels.

    “CoreLogic Daily Indices are currently unavailable.”

    • Hahahahaha as predictable as the dawn.

      Yesterday was heavily negative. Panic time.

      How’s your world leading index now Chris Joye?

    • DingwallMEMBER

      Corelogic: “We’ve has some feedback that a large proportion of investment property owners are confused that red means down and green means up. So we have decided to rebuild our entire website and model it on the Dalian Iron Ore page. The site will be re-opened when red shoots appear”