Australian dollar misses out on global relief rally

See the latest Australian dollar analysis here:

Macro Morning

The Australian dollar was weak overnight despite a powerful relief rally for anything and everything that has been recently squashed by rising US yields and greenback. DXY eased as EUR rose:

The Australian dollar could not catch a bid and still sits right on the neckline of its head-and-shoulders topping pattern:

Gold did better and has a possible double bottom in place. The oil chart does not look well:

Base metals enjoyed a weaker DXY:

Big miners were more mixed:

EM stocks still look dangerously poised but did lift:

Junk is absolutely fine leaving the Fed on the sidelines:

US yields climbed:

Stocks reversed recent trends with a powerful relief rally in growth. The wider market still looks strong:

DXY took a breather but it is only that, in my view. Ahead is a booming US jobs market. If not tomorrow then over the next six months:

As American GDP booms back at a pace unseen in twenty years:

Leaving the world eating its dust:

This is leading markets to fight the Fed:

Thanks to the tailing Biden fiscal gale. Though it’s was more moderate than I had hoped:

  • $2.2tr over ten years but mostly over eight.
  • Roughly halved between hard and human infrastructure.

It is almost all new spending and will add 1%+ to GDP per annum for the life of the Democratic White House assuming it wins a second term.

US growth exceptionalism is assured as Europe does too little fiscal, China returns to restructuring and EMs get crushed between them.

No change for me. AUD, EMs, commodities and growth stocks to keep taking the heat.

David Llewellyn-Smith

Comments

  1. The Traveling Wilbur

    Are their yields raises Mr Chekov?

    Yes, Captain. Broadly. Over the entire sheep.

    Then FIRE Mr Sulu. Open FIRE with everything we’ve got. We’ll make these lily livered cowards pay for their ungratefulness!

  2. pfh007.comMEMBER

    If Biden is able to drive his spending into productive investment the US will be off like a rocket.

    Particularly as the operation to jab the population is picking up speed and a good chunk of the population have been infected already.

    More than a few in the US are likely to understand that you don’t get to keep leading the world by allocating capital to Wall Street scams.

    The US needs to get back to doing what it does so well.

    Do the right thing after exploring every possible alternative.

  3. This will be like Trump’s stimulus back in 2017/18.
    A lot of excitement, predictions about growth, rising inflation and bond yields.
    We got that for 6 months and then it all fizzled out.
    Noticeably, bond yields peaked and fell.
    I can’t remember the exact Trump stimulus figures, but Biden is just doing the same thing.
    Obviously, we will get the same result.

  4. Unless the fed increases its monetary easing relative to the other major nations, the USD should strengthen.
    Not because of all the debt driven stimulus, but simply because the US economy is in a much better position than its competitors.

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