DXY was soft overnight with US markets closed for Turkey Day.
AUD firmed.
CNY stable.
The Japanese bust is contained by the Fed.
Commodoties were weak without the Wall St inflation pump.
EM stocks OK.
Junk OK.
Yields OK.
Stocks closed.
Societe Generale has the rub.
The RBNZ inspired a big FX move overnight by cutting rates by 25bp to 2.25% but indicating that the easing cycle is over.
That flips the market’s focus from cuts to wondering when rates will start to rise.
With Australia’s monthly CPI data coming in 3.3%y/y for the trimmed mean measure (after 3% last month), Australia’s rate market, too,is coming round to the idea that rates might be higher by this time next year.
That makes AUD look absurdly cheap.
Unfortunately, AUD/USD tracks USD/CNY trends (inverted) much more closely these days than it tracks rates.
Oh, for a Chinese decision to let the CNY appreciate!
Still, with frost on the lawn and rain forecast, the appeal of an Australian summer is obvious (Ashes notwithstanding).
That interest rate spread is pretty wild. AUD may not be the currency of old, but I agree that there is a strong upwards bias and can see a run to 68 cents so long as wider risk holds.
