Australia dollar falls as death stalks America

See the latest Australian dollar analysis here:

Macro Morning

DXY firmed last night:

The Australian dollar fell:

Gold looks precarious:

Oil is trying amid a vast glut:

Metals did OK:

Miners are back from the dead:

EM stocks firmed:

Junk was strong:

Treasuries were bid though it does not show on the chart:

Stocks too:

Westpac has the wrap:

Event Wrap

Ahead of the December meeting, ECB President  Lagarde said policy makers will focus on emergency bond purchases and long-term bank funding: “While all options are on the table, the pandemic emergency purchase program and targeted longer-term refinancing operations have proven their effectiveness,” she said. “They are therefore likely to remain the main tools for adjusting our monetary policy.”

Event Outlook

Australia: The Melbourne Institute will publish their November inflation expectations. Expectations fell 1ppt during the nadir of the pandemic, but have since stabilised around 3.0-3.5%.

New Zealand: September net migration will remain muted with border restrictions in place.

Euro Area: The market expects September industrial production will rise 0.6%, but the recovery will stall in coming months as Europe again returns to lockdown. The ECB will hold its annual Forum on Central Banking (Nov 11-12). This year’s theme is “Central Banking in a Shifting World”. Notable speakers include ECB President Lagarde, BoE Governor Bailey, and FOMC Chair Powell.

UK: The trade balance is expected to narrow again in September (market f/c: GBP850m). Whilst the market is looking for GDP to rebound in Q3 (market f/c: 15.8%), a contraction is imminent as the new lockdown begins to bite.

US: The October CPI is set to remain anaemic at 0.1% (1.3%yr), well below the Fed’s 2%yr inflation target. Meanwhile, elevated initial jobless claims continue to emphasise the churn being seen in the labour market (market f/c: 732k). The FOMC’s Evans will speak at a Detroit community forum (05:00 AEDT).

The return of a Treasury bid helped end the tech stock rout. There is no inflation coming with a Republican senate sitting on stimulus:

And another deflation shock is bearing down fast upon the US. COVID cases march on:

Deaths are accelerating with the usual one month lag:

And are about to go parabolic as hospitalisations surge to records:

Within three weeks deaths will be back at record highs. With a looming vaccine promoting confidence prematurely and a vengeful El Trumpo doing nothing, it will probably get even worse. America will in the throes of resurgent lockdowns, public or private, by Christmas.

I do still see the US dollar falling away next year as global recovery takes hold with vaccines but not until the wave of death sweeping America has passed.

Think the reverse for the Australian dollar.

David Llewellyn-Smith
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Comments

  1. Well I was up early for my walk,and was in the neighbouring suburb shopping centre.Kirra.
    The news agent was unwrapping the papers, and on the front of the AFR was the headline
    Economy bounces out of recession. I said, mate, sell me one of those, this will be interesting.
    What is going on??
    HE said, they are trying to talk up the economy, to the mug on every corner.
    I agreed.
    Meanwhile,on p5 BIG Clive has a full page add sticking it up Shifty Shipton.
    and blow me down if paper hasnt made the print smaller.???
    PS I say this Pfizer vaccine is a hoax. More fake news by the media.

    • And now, the Russians go one better than Pfizer, Sputnik V is supposed to be 92% effective.
      So says the Murdoch mafia

    • Well down here in Hellbourne we’ve finally got bookings back at the pool so the local swim groups are restarting their bookings. One of the young Chinese Aussie girls whose family used to be in at the pool 5 days a week pre Covid said to the swim coach that she couldn’t come to training every day of the week because of the cost (they’re at our second facility which is outdoors and significantly cheaper than the indoors pool) but she would continue training by herself. So they can cope with our $5 entry fee but not the coaching fee on top of that. The coach said not a problem, they expected that quite a few people would be doing that.

      This is the second time in a week I’ve overheard people at the pool openly state they can’t afford to swim as often as they used to. And I don’t overhear many conversations

      • Its all a hoax.on walking through the shopping centre at coolangatta, i noticed the Lorna Jane group of shops, on the main street, closed
        must have closed on the weekend.
        Now that outfit never made any money, I’m surprised they lasted as long as they did.
        that is a 100% example in the collapse of discretionary spending.

      • Good work, thanks.
        Something is hugely wrong.
        despite all the hype, the market is at a tipping point, I say heaps of insiders are selling.
        BE very cautious.

      • The CEO had to disclose ages ago bye law that he was selling his shares on a certain date to avoid “insider trading claims”.
        Funny how that date coincided with the vaccine announcement and a 16% rise in the stock.
        Unbelievable hey ! sarc/

        • If the stock was any good he could have cancelled the sale or bought back in
          but as the major excuse in Straya for bailing,
          he may have had “tax obligations”

        • I think the sale is price sensitive and preannounced but I get what you mean
          As far as the vaccine is concerned it is possibly the attempted triumph of positive thinking over science and the virus doesn’t give a shit about positive thinking
          Why is it that drug companies are making these announcements and not the medical profession?The medical profession in general(ie those not on the government employment or drug company payroll)knows better.Far to early to call this effective.And what about the new mutations?Does the vaccine work in the higher risk groups?How long is it effective?What long term side effects?.Do they have adequate numbers to draw a conclusion of significance?

          • Same as why is the media and the other clairvoyants making the call in the USA election
            In about Feb 1790, those who set up the Constitution (of the USA) did not give the media the ability to declare the winner of a presidential election.
            And that has never been amended.
            The election call comes on Jan 3 from the Joint Session of Congress

            Puntrs are being led by thier noses by commentary

          • Afraid so.At what time in history was it okay for drug companies and not the medical profession to make such announcements?

          • Surely you jest? A lot of research is done by pharmaceutical companies. A lot of it tendentious. Benefits are often overstated. Sample sizes are usually small and the use drugs are put to when approved are not infrequently broader than what the approval studies examined.

          • No jesting
            We are playing in very serious times.Yes when we are fart seeing around drug companies may make announcements much of which is ignored or forgotten about by the general populace.This however is not the time for bullshit(and it’s deleterious consequences)All significant announcements should be veted by independent appropriate medical bodies