Australian dollar plunges on new COVID shock

See the latest Australian dollar analysis here:

Macro Afternoon

DXY is tearing away and EUR sinking as COVID ravages the EZ:

Oil puked and gold fell:

MEtals did better on baseless Chinese stimulus rumours:

Big miners too:

EM stocks do not look well again:

But junk is OK:

As the yield curve was thumped:

GAMMA is still the only game in town:

And why not, I guess, given the pandemic has returned to Europe. Deutsche:

This morning Austria announced a nationwide lockdown from Monday after a recent dramatic spike in Covid cases. They also made it a legal requirement to get vaccinated from February 1st. Meanwhile the German health minister announced that he couldn’t rule one out after restrictions were announced yesterday for the unvaccinated. The worry would be that Austria put restrictions only on those unvaccinated as recently as Monday and have quickly accelerated these.

Today’s CoTD shows daily cases per million for a selection of large countries and regions plus interesting other countries, especially those in eastern Europe that seem to be going through an aggressive wave.

For most of the countries near the top, the spike in cases has occurred fairly rapidly over the last couple of weeks. The exception is the UK where cases have been high and steady since the summer as high vaccination rates plus high infection rates have seemingly provided some degree of herd immunity. It’s important to bear in mind that testing rates vary considerably (the UK does the most per person in the G7) and that can affect the relative rankings, but the overall trend higher is clear.

The news is hitting European markets hard this morning as fears mount that the virus and restrictions will spread across the continent again. However the curve ball might be the US. DB’s Robin Winkler has been pointing out that the vaccination rate in Austria (64%) is somewhat lower than the likes of Spain (79%), Italy (74%), France (69%), the UK (69%) and Germany (68%) but it is still higher than the US (58%).

So although all the headlines are in Europe at the moment, will the US be more vulnerable than many European countries over the course of the full winter? Recent history suggests the US have a higher bar for economic restrictions related to covid but it also has a lower vaccination rate than their European peers.

Remember, where the EUR goes, AUD always follows with an overshoot:

Houses and Holes
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    • Goldstandard1MEMBER

      The USA is approaching 1m dead from Covid, could be over 2m by the end of this. Not to mention the social unrest along the way which Australia is getting a good dose of as well.

  1. Mike Herman TroutMEMBER

    The EUR been sick for a while now as well… I read today that one reason could be the Chinese selling the EUR to get some USD for their property debacle….

    • I can’t see that the reduction in transmission is sufficiently great to justify the demand that each citizen turn over such power to government. Time will tell if any of this power is returned. Let’s seed if we remain a police state.

    • Do you feel that the Pfizer vaccine reduces transmission?

      In the absence of evidence, my guess is that the reduction in transmission is either non-existent or less that had been hoped and promised to the authorities.

      Do you trust Pfizer to act honourably?

    • Good guess. I trust Big Pharma as far as I can throw them. Why the Chinese vaccines are approved and the Adelaide vaccine is not mystifies me. These are purely commercial decisions.

  2. But but vaccines…….
    This northern hemasphere winter is going to expose the gap between the reality of the vaccines and the dishonest way they have sold our political leaders (as ‘protection’ where ‘protection’ is undefined) to the population.

    I think the current appraoch of blaming the unvaccinated is really another dishonest narrative to cover up the lies we have been told about the vaccines and the extent they ‘protect’ us from infection… Vaccinated catch and spread COVID, they just don’t die or need to go to ICU as much (I am vaccinated by the way). The un-vaccinated are actually put at risk by the behavior of the Vaccinated who think they can’t catch it!

    we need a proper vaccine that confers steralising immunity. Until we have that then this sh*t is just going to go on and on and the lies we are told will continue to mount.

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