See the latest Australian dollar analysis here:
DXY was firm last night:
Despite that, the Australian dollar rebounded:
EMs more so:
Gold is having another crack:
The oil bottom is in:
Dirt was mixed:
And miners of it:
EM stocks fell:
But junk jumped:
Bonds are all bid:
Stocks fell but the robots rallied to end up:
Westpac has the wrap:
COVID-19 update: The global case count, according to the latest data from John Hopkins University, indicates 85k new confirmed cases worldwide on 13 May, vs 85k the previous day and vs 99k at the peak on 12 April. 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 Russia, Brazil and India are accelerating.
US-China tensions persisted, with US President Trump, via interviews and tweets, suggesting that he would not engage with China’s President Xi in the near term.
US weekly jobless claims were 2.981m (vs 2.5m expected), but slightly lower than the previous week’s 3.176m. Continuing claims appear to have stabilised below 23m, suggesting workers returning are roughly matching new jobless as lockdown are relaxed.
Twice in consecutive days BoE Governor Bailey has stressed its easing bias but pushed back (without dismissing) on potential for a negative interest rate policy, favouring more QE instead.
New Zealand: The April manufacturing PMI will be published, and should post a sharp fall versus the reading in February (the survey was not run in March). April REINZ house sales and house prices will follow. The plunge in sales during the lockdown will make it difficult to gauge the true impact on prices.
China: April industrial production (market f/c -5.4%yr ytd), April retail sales (market f/c -15.6%yr YTD) and April fixed asset investment (market f/c -10.0%yr ytd) are all due for release. Despite the weaker figures versus a year ago, signs of recovery should be evident as China gradually comes back online.
Euro Area: The March trade balance is expected to narrow to €17.0bn from €25.8bn in February. In addition, the prelim release of Q1 GDP is set to confirm the unprecedented 3.8% contraction that printed in the flash reading.
US: April retail sales will open a day of important releases. Westpac is looking for a record monthly decline of 13.0% as the lockdown crushes retail trade. Similarly, April industrial production is expected to post the largest fall in the century-long history of the survey (market f/c -12.0%). Against this backdrop, March business inventories will continue to unwind (market f/c -0.2%). Reflecting widespread hiring freezes, JOLTS job openings are poised for a softer print of 5800k. The market anticipates a slight recovery to -60.0 in the May Fed Empire State index as New York gets the virus under control. However, the May University of Michigan consumer sentiment index is expected to deteriorate further to 68.0. The FOMC’s Kaplan will take part in a moderated discussion at 08:00 AEST.
Alas the ABS took a dump on Australia with its corrupt 6.2% unemployment figure. Had the correct figure been printed – 11.7% using the US methodology – we’d have seen the AUD get smashed.
Instead the ABS juked the numbers so that bulls had a figure they could hold onto. And today we see the result with the AUD flying again. Even despite this:
President Trump expects to see the needle move on the economic rebound starting in the third quarter as more states reopen for business.
“I call it a transition to greatness. You’re going to have the third quarter….That’s a transition quarter. We’re going to do well in the fourth quarter, and I think next year, with all of the stimulus, all of the things we’ve done, I think we’re going to have one of the best economic years we’ve ever had,” Trump told FOX Business’ Maria Bartiromo.
Trump also wants a stronger U.S. dollar to accompany the economic recovery.
“It’s a great time to have a strong dollar because the whole world — you know, we’re paying zero interest, right. That’s never happened either. We’re paying so low. Everybody wants to be in the dollar because we kept it strong. I kept it strong” he said.
The dollar has advanced 3.67 percent vs. euro and is down 1.48 percent against the Japanese Yen, as tracked by the Dow Jones Market Data group.
ABS labour market data has been disgraceful for years. It failed to capture the slack throughout the past cycle and is now setting a preposterous benchmark for the next.
Has it been taking statistics lessons in China?