See the latest Australian dollar analysis here:
Forex markets reversed weekly moves on Friday with DXY suddenly strong on what looked suspiciously like safe-haven buying as risk assets struggled. EUR fell:
The Australian dollar was bashed against all major DM crosses. It is already hurtling to new lows versus EUR:
Commodities largely reversed downwards (except oil):
Exuberant miners woke in fright:
EM stocks are desperately clinging to the cliff’s edge:
EM junk is fading rather than plunging:
The yield curve sank:
As stocks struggled:
This is rising growth worries playing out as the COVID reopening boom fades away in China and the US. It’s not at a crisis point but is edging that way. Ahead, at best, we see an ongoing commodity price bust that really got going on Friday for iron ore. But I’ll want to see base metals in free fall as well before I’m persuaded that more stimulus support is coming.
Chinese yields are leading the whole world lower:
Soon enough we’ll see more RRR cuts and when that fails to lift the falling Chinese economic aircraft it will be cash rate cuts as well. That’ll break CNY:
And where CNY goes, AUD follows. That China is leading the global growth slowdown is the key to the AUD and the shorts are moving in:
Until one or both of US and Chinese central banks panic, AUD is going lower.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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Central banks remaining on their hawkish bent saw
A difference of opinion about long bonds in the US
https://twitter.com/EddBolingbroke/status/1421199979876605959
China stopping the planes……..taking a leaf out of our book.
http://society.people.com.cn/n1/2021/0730/c1008-32176416.html
Container Ship ore prices at dock in China for 63% fines is down 18% – futures smashed almost 25%
This is the real ore indicators and AUD is being smashed for that.
Australian exports outside of iron ore have now collapsed by 40% due to China trade war. When Iron ore goes below $100 we are screwed. It will go well below $75 – most likely below $50 with everything they are putting in place including Evergrande as they slam the brakes on apartment construction, steel export, etc.
Thought this would have happened in March – started in May.
This is the end.
It looks like AUD is heading lower, while markets look headed for a correction. That creates a dilemma, moving AUD into offshore markets right now. Will the falling AUD take enough pain out of an overseas correction? I dunno.
It could help. Inverse Index ETF’s….?
Has not the Fed already panicked by setting up the standing US$500bn domestic and US$ 60bn international US$ repo facility at a rate of 0.25% and does this imply an international (Euro) US$ shortage? Might take some time for international Central Banks to use the facility.
Guys with nads way bigger than yours have regretted their decision to short the Aussie
What makes you think it’ll work this time around?
Fundamentally the Aussie is F’ed, Technically it is moving in the direction to reinforce the fundamentals. But here’s the thing, it’s a bit like Aussie Housing in that there’s no earthly reason for it to be priced as it is, it’s just the way things are.
One day you’ll be right that much is guaranteed however the relevant question is, will you be solvent when that day comes?