Australian dollar blasts higher with iron ore blowoff

DXY is struggling to hold support:

The Australian dollar scorched everything in sight:

Gold mania:

Oil flamed out:

Metals mania:

But a GLEN shocker landed on miners:

EM stock breakout:

Junk fine:

Yields squashed:

Stocks mania though not Europe (or Australia):

The only chart that matters mattered:

Not much happened, via Westpac:

Event Wrap

US initial jobless claims fell 249k to 1,186k in the week ended 1 August (vs 1400k expected), halting a concerning rise in claims over the previous two weeks. Continuing claims declined 844k to 16,107k in the 25 July week (vs 16,900k expected). While the report is better than expected, it still reflects weakness in the labour market.

Event Outlook

Australia: The RBA will release full detail of its updated forecasts in the August Statement on Monetary Policy. Their assessment of the risks ahead will also be of interest. Assistant Governor Economic Luci Ellis will then speak via an ABE webinar.

China: July trade and foreign reserve data is due along with the Q2 current account detail.

USNonfarm payrolls are likely to throttle back sharply in July given the rise in new cases and the response of authorities. ADP and the ISM employment measures signal that risks are to the downside. The unemployment rate is likely to fall further, but only at the margin as a result. Average hourly earnings will round out the labour market detail.

We probably can’t go past one more char to explain the AUD with iron ore blasting through $120:

The Great Fakeflation continues without an economy onwards and upwards into whatever, taking the Australian dollar with it.

At least iron ore is real, I guess…

David Llewellyn-Smith
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Comments

  1. Throw a rock and you’ll hit a commodity that’s heading for the moon.

    Silver up another 8% overnight. Meeza gettin scared, Anie.
    Why does the move have to be so parabolic in nature?

    • Or maybe people are getting a little worried holding so much cash in accounts knowing that with money printing and low interest rates it maybe a good hedge to hold Gold Silver Crypto etc. It’s not referenced here but Crypto has also joined the chorus of movers in recent weeks. It’s funny because I was only saying yesterday on some post I expect silver to take off, look at it’s price in 2010, looked similar to gold at the time.

      • Oh aye, and the gold move has been a steady grind higher over the last 2 years off those collapsing yields, albeit with a decent blip higher the last month.

        What I find disturbing (and I have some silver players on), is this move in silver. There is nothing healthy about it. Doesn’t mean it won’t go higher, I’m betting it will, but I see a cliff on the other side and no parachutes.

        • Yes the price action in silver scares me too. However most of the silver that has been used for industrial purposes is gone for good as it can’t be recycled. One reason why cheap electrical crap should, ideally, not be made

          • I see more on youtube about people taking up silver as a form of trading currency in future if their paper currency collapses, gold coins wouldn’t be that great but silver is ideal in cases when government financial systems look like they are close to breaking, plus it’s another hedge from worthless paper. Hype or no hype, if the idea gains traction it will take off and I am pretty sure banks may start to buy it up as well in future if not already.

            My friend received a email from a New Zealand credit union today telling them that they are flush with money, have plenty in reserve. When banks start sending those notices out that is what I would call truly scary, especially in NZ where as far as I know there is no no bank bailout if they go under.

        • Looks very unstable. If insolvencies start arriving quickly in Q4 then the USD could explode (and commodities collapse) as everyone dashes for the exit.

      • Yes I see a lot of that too, though I put that down to American paranoia, but having educated myself a little on the drivers of civil unrest in the US recently, and the structures of all their different groups etc, I can understand why people think tht and are preparing themselves. I would if I was there. However Rick Rule has made the point that in much of Asia (esp south Asia and SEA) silver is widely held among the general pop which is quite poor. So there is a huge amt of Asia that saves in silver, but they could also liquidate their holdings if required. But with industrial silver being unable to be recycles it is long-term bullish for a re-evaluation of prices, even if human ingenuity means we can figure out some materials substitution. However apparently what is coming out of the ground is now only 8:1 with gold, compared to 16:1 historically. However silver is also viewed as the poor man’s gold, so as gold goes up it becomes unaffordable to more of the global pop, so more people will go into silver as their PM diversifier. Then you have mine closures due to Covid, the fact that most silver mined is a by-product of other mining and it all is an interesting puzzle. There are very few pure play silver miners in the world, and apparently only a few of them are quality companies so I have a feeling that even the junky or far from development silver explorers will be re-rated higher, so they make a good speccie bet. Anyway it is all very interesting to observe, and cautiously participate in.

        That NZ anecdote is VERY interesting!

    • Welcome to the blow-off, where every man and his dog is a trading wizard, everything that is trending up is the best company in history, and forget the dips, just BUY F’KN!!!

      When everything is parabolic – if we get that far – it’ll be time to be short.

  2. Central banks stepping in to loan companies money to pay their bills in the absence of income……banks running for cover

    https://fred.stlouisfed.org/series/DRTSCILM

    Everyone still staring at the sky waiting for the old world to re-establish itself…………….a world-wide Cargo Cult developing…….no one trying to prepare for anything different.

  3. At some point in the near future Mr Market will crush everyone. Gold, Silver, Stocks, Bonds. But at the moment it’s Davey Day Trader time. I’ve taken lots of gold miner profits off the table in the past week. I still hold some, I’m expecting those to disappear shortly, but will hold them long term as a hedge. But if they take off near term, I will take those profits too. Caveat emptor!

  4. https://www.bloomberg.com/news/articles/2020-08-06/u-s-moves-to-tighten-disclosure-requirements-for-china-listings?srnd=premium-asia

    A high-powered group of U.S. regulators said stock exchanges should set new rules that could trigger the delisting of Chinese companies, following mounting concerns that investors are being exposed to frauds.

    Why the hell do they care to be honest? They are quite happy for investors to be exposed and re-exposed to zombie companies along with all the other madness going on.