Australian dollar

17

Australia’s future is deflation

Some weird old bullhawks return today: The dollar’s potential loss of its status as a high-yielding currency could cause the Aussie to plunge to US62¢, forcing the Reserve Bank to raise interest rates despite still-weak domestic growth, according to one of Asia’s most prominent currency strategists. The weak consumer economy makes it difficult for the RBA to raise

25

Where to invest once property tops

Via the AFR: Australia’s housing market may be at its peak in this cycle, according to some experts, and investors might be wondering whether they should look for alternative places to put their money. With four of the top twenty Australian companies trading at discounts to their long-run averages, the top tier of the stockmarket

10

Why is the Australian dollar not following iron ore?

Today Bloomberg wonders why the Aussie dollar is not tracking iron ore: “Really, it should be going lower,” said Andrew Ticehurst, a rates strategist at Nomura Australia Ltd. in Sydney, who notes a declining U.S. dollar is helping prop up the Aussie. “If commodities are falling appreciably and the currency’s not offsetting it, that’s a net tightening

19

Risk turns off as Trump pushes BIG RED BUTTON

The standing joke that is the BONDCANO just got laughed at a little louder as Donald Trump pushed the BIG RED BUTTON: Pentagon officials told NBC News on Thursday that dozens of Tomahawk missiles targeted a Syrian military air field near Homs tied to the chemical weapons strike this week, which activists said killed at

9

Australian dollar “fair value” falling

From Westpac: The undervaluation has been the result of skepticism over the sustainability of the bulk commodity bounce augmented by the ongoing compression in the yield spread between Australia and the US. I expect both to keep happening. If I’m right then both will drive the fair value band much lower in the next eighteen months,

12

Australian dollar jumps as yield spread hits sixteen year low

Macroprudential discussion is going mainstream just in the nick of time. The Aussie dollar is again threatening to break above the 77 cents ceiling in the bullish ascending triangle pattern: This is despite Aussie yields falling today: As US yields rise: Which has the local slope steepening: As the US flattens: Thus the short end

55

What now for Brexit punished markets?

 From Morgan Stanley: We see GBP moving to 1.25-1.30 and 15-20% downside to European equities relative to Thursday’s levels. Corporate and sovereign credit present the best opportunities to buy on weakness Economic implications: The UK faces a prolonged period of uncertainty which should lead both investment and consumption to wane. Longer term, a less open

7

Is the Australian dollar back to “safe haven” status?

From Sinofax: The Australian dollar has proved resilient amid the current bout of global jitters, climbing against all but the most traditional safe-haven currencies. In late afternoon trade on Tuesday, the Aussie was buying US73.98¢, up slightly on the same time on Monday and compared with a low this year of US68.27¢. Its resistance comes despite investor flight

86

BT: Australian dollar going to 40 cents

From Australia’s last sane analyst standing. Vimal Gor at BT Investment Management: Calm before a currency storm? May was a calm-ish month after the recent period of extreme volatility. This was not surprising given the confluence of risk events we have approaching over the coming weeks, including the BoJ, FOMC, ECB, possible Brexit and the

6

Aussie dollar breaches 75 cents on RBNZ housing panic

The Aussie is charging again: As the RBNZ disappointed markets, summary of Governor Wheeler’s commentary from Forexlive: Inflation expectations seem to have stabilized Not much has changed since our previous OCR decision One further cut is built into our interest rate projections, but that could change You could end up with no cut or more cuts

12

Kohler: Australian dollar to the moon!

From Mr Kohler today: Friday’s employment report in the United States was a dramatic demonstration of how inadequate the old economic indicators have become. …The truth is that the labour market is slacker than the unemployment rate suggests. Underemployment is 9 per cent, and people are dropping out of the labour market who would take

14

ANZ: Post-AAA Australian dollar headed to 50 cents

It’s macrobation day. More on yesterday’s ANZ note: One of the puzzles of this cycle has been the persistence of AUD strength and the AUD’s ability to outperform against a number of other global betas to which it has traditionally been correlated, eg Asian equity market performance. This may have been driven by a heightened focus on sovereign ratings

14

Finally Captain Glenn hits the dollar

It’s been one of those semi-permanent frustrations of Australian monetary policy in recent years that every time the RBA opened its mouth the dollar took off. Yesterday Captain Glenn Stevens finally broke this pattern by whacking the dollar lower, from the AFR: He emphasised the current approach – which has seen inflation come in almost dead in

24

The world’s mangiest AAA rating

From Fairfax: ANZ currency strategist Daniel Been notes the currency has performed better during this cycle than in past downturns, as global investors chose to ignore many of the economy’s broader vulnerabilities. “One of the puzzles of this cycle has been the persistence of AUD strength and the AUD’s ability to outperform against a number of other

40

AAA balls-up as RBA calls out Budget lies

From The Australian comes Mr Rainbow who has saved the best for last: Plans to balance Australia’s federal budget by around 2021 are implausible, says Reserve Bank policymaker and economist John Edwards, adding that the nation risks losing its prized AAA credit-rating status. Mr Edwards said the plan outlined by Treasurer Scott Morrison in the government’s

10

Australian dollar crushed as spreads tank

Hawkish Fed minutes and voila we’re on our way to the 71-handle: The US Australian bond spreads are collapsing again. Aussie yields were dragged a bit higher by the Fed: Us yileds all jumped: And the spread crashed across the curve: The US curve deep not flatten any more, though the trend is ugly: And