Australian dollar pump and dump on virus cure!

See the latest Australian dollar analysis here:

Macro Afternoon

DXY rebounded last night:

Australian dollar pumped and dumped vs US and went parabolic elsewhere:

EM to the moon:

Brent ecstasy!

Gold OMG!

Metals firmed:

Miners to the moon!

EM stocks to the moon!

Junk to the moon!

Yields to the moon!

Stocks to the moon!

Westpac has the wrap:

Event Wrap

vaccine developed by Pfizer and BioNTech was found to prevent more than 90% of symptomatic Covid-19 infections in a trial of tens of thousands of volunteers, the most encouraging scientific advance so far. While the results are preliminary, they may pave the way for the companies to seek an emergency-use authorisation if further research shows the vaccine is safe.

Event Outlook

Australia: The October NAB business survey will capture reactions to the Budget and the economy’s continued reopening.

New Zealand: Westpac expects October card spending rose 3.0%, with weekly spending gauges pointing to firm durables demand.

Japan: The September current account surplus is expected to stabilise around JPY2025.1bn after widening in August.

China: The market anticipates that the PPI will continue to contract in October (market f/c: -1.9%yr). Meanwhile, the October CPI should moderate in the face of decelerating food price growth and sluggish underlying inflation (market f/c: 0.8%yr).

Euro Area: The widespread return to lockdown will cast a shadow over the November ZEW survey of expectations.

UK: The ILO unemployment rate is forecast to reach 4.8% in September. Ahead, the extension of the wage subsidy will provide crucial support.

US: The October NFIB small business optimism index is set to remain broadly stable at 104.4. However, the election outcome and resultant tax implications may pose a risk going forward. Following this, September job openings from the JOLTS report are expected to remain around 6500k, but labour market conditions vary substantially between sectors. Finally, the FOMC’s Quarles, Rosengren and Kaplan will speak.

Vaccine ecstasy is here. Just as well:

The US recovery is falling away even as markets price the vaccine boom:

So, after one day of buying deflation assets with both hands on lack of stimulus, the market has whipsawed back to inflation assets on the coming vaccine wave as tech cops it, the value rotation kicks off and bonds back-up.

The Pfizer results are impressive if limited. We don’t know how long it will last. It is two-shot which will diminish its take-up, needs to be stored at -70C meaning rollout is bit more difficult, so it’s not the cure-all. But, obviously enough, as the first of many it is encouraging.

The Australian dollar pumped and dumped on the result. A post-virus recovery is bullish for the currency for a while. But, as said yesterday, not long. As global growth rebounds to something near normal then, Australia’s particular problems relative to global recovery will come the fore:

  • falling iron ore;
  • China decoupling;
  • crushed immigration;
  • weak profits,
  • and Depressionberg Unstimulus…

leading to a falling AUD as Australia lags the global recovery.

David Llewellyn-Smith
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Comments

  1. S&P record high gap up on red candle close after doji star no less. Lol. First time for everything i guess.

  2. Well I think RBA would not be unhappy to see a the currency a bit lower.
    In other news Trump efforts to steal election continues even in Red states i.e. Georgia. I am hoping this is just noise but fear he will do more damage to the American system on the way out.

    • RobotSenseiMEMBER

      I watched a few minutes of McEnany or whatever her name is and a few of her unimportant associates have a WH press conference basically outlining some flimsy “evidence” they have, then getting cross at the media for not “looking into it”. The whole charade is equal parts hilarious and sad. I don’t know if I pity them more if afterwards they say “I was just doing my job”, or “I truly believe this election was stolen by the dems”. Goodbye and good riddance of this morally bankrupt administration.

        • There’s actual proof of voting fraud.

          There was no proof that Trump and the Russians conspired to steal the 2016 which the Democrats peddled for three years.

          • Sure….fraud happens, probably every election small or big…but massive, statistically signficant electoral fraud? That’s really what we’re talking about, and that is also what is improbable; hence, even Fox News switching off Trump et al when they keep claiming it.

          • Trump was always a third party candidate the Republicans just begrudgingly accepted him in the end because it was better than crooked Hillary.

            The fact that at one point in Pennsylvania Biden was gifted 140k votes to virtually nil Trump votes deserves investigation is statistically improbable if not impossible, ballots cannot be accepted after election day, ballots cannot be altered.

            Given what is at stake, given Biden overcame almost insurmountable deficits (Trump was a $1.25 or $1.30 favourite at one point), given how close some of the results are, there needs to be a thorough investigation. The Democrats would be demanding the same if it was Trump that received 140k votes to virtually nil at 4 in the morning. It would be called a coup.

            The Democrats and their voters all believed in this idea of Russian collusion even though zero justification for starting a massive campaign and investigation that lasted years, and in the end nothing was proven, no evidence at all of Trump colluding with Russians.

  3. Well, I think it’s safe to say a lot of money was lost today. Everyone is crowded into the same trades and must’ve been whip-sawed.

  4. Putin (and Xi Jinping) still hasn’t congratulated Biden.
    Trump fires Secretary of Defence.

    Connect the dots….

    And…

    “Mr Esper’s opposition to using active duty troops to help quell protests in Washington DC infuriated Mr Trump, and led to wide speculation that the defense chief was prepared to quit if faced with such an issue again.”

    Hmmm….

    • I’d see them as separate events, personally.

      The firing is probably because the Defence guy told Trump he should stand down, as there was basically nothing wrong with the electoral process, other than Trump losing.

      I’d say Xi and Putin are disappointed, as Trump would have ruled over USA he just made impotent, and they could get on with bullying their neighbours.

  5. Agree with you that both China and Russia are disappointed. Their ancient philosophy of divide and conquer has been put on the backburner for a while with Trump out. Maybe they’re trying to have their own preferred man put in place especially as Biden is hamstrung in a smooth transition.

    Also, I thought that Trump wants to deploy the army in case he needs to quell the unrest that will occur when he refuses to vacate the office. Esper has already said he wouldn’t do that again.