Stock markets are largely higher across Asia but there is some buying exhaustion setting in as the positive spin on the US election and vaccine news begins to wane despite the record high on the Dow Jones overnight. The USD continues to firm up against most of the majors with Bitcoin trying to pip above
Australian Dollar Analysis, News and Forecasts
The Australian dollar, Aussie dollar (AUD) is one the world’s great commodity currencies. Founded in 1966 and floated in 1983 the Aussie “battler” is the 5th most traded currency in the world despite the economy being only the 12th largest by GDP.
The Australian dollar spent much of its first two decades post-float consistently devaluing from the pre-float value of $1.48 US dollars in 1974 to a low of 47 cent in 2001.
Subsequently it broke this huge downtrend with the rise of the Chinese economy and it’s insatiable demand for raw materials – especially those inputs into steel production, iron ore and coking coal – which Australian was endowed with in abundance. It topped this enormous turnaround in 2011 at $1.11 versus the US dollar.
As the super cycle entered decline so too did the Aussie, falling to a low of 68 cents in 2016 and still falling.
However, the Australian dollar had became popular as a small reserve currency holding with foreign central banks. As the value of the currency virtually halved during the bust they kept buying. Because global central banks were fighting both low inflation and oversupply worldwide, many engaged in an overt currency war, deliberately devaluing their currencies to capture or protect global market share of production. This was exacerbated by private sector flows pursuing the “chase for yield”.
This proved a challenge to Australian macroeconomic managers as the commodity bust persisted. Without the lower value, the Australian economy was unable to compete in non-resource sectors. The Reserve Bank of Australia embarked on a series of interest rate cuts, jawboning and, eventually macropudential policy, to bring the Australian dollar to fair value.
There are five drivers to the currency. Australia’s relative position vis-a-vis Chinese and its own growth; interest rate differentials, the strength or otherwise of the US dollar; the terms of trade and sentiment. Each of these tips into any fair value model but over time the primary driver is the terms of trade. The relative strength of each waxes and wanes with wider trends. For instance, during the “tech bubble” of the late nineties the Australian dollar was battered lower by poor sentiment as it was seen as a pre-tech dinosaur. After the “tech bust”, the currency rapidly recovered as sentiment turned favourable for real assets like commodities.
MacroBusiness covers all apposite data and wider analysis of these issues daily.
DXY is at the edge of breakdown and EUR breakout: The Australian dollar likewise: Gold puked again as oil took off: Metals mania: Mining mania: EM mania: Junk mania: Treasuries were soft: Stocks unstoppable: What a blowoff we have on our hands now. Risk has not only ceased to matter it has ceased to exist.
Stock markets are pushing forward with gusto across Asia in the wake of the “conceding non-concession” from ex-President Trump overnight, with USD giving back some of its gains against the majors overnight, although gold is flopping to new monthly lows, now at the $1824USD per ounce level: The Shanghai Composite is meandering nowhere going
A surge at the end of Wall Street’s session last night has brought more risk appetite to Asia after yesterday’s mixed start to the week. The appointment of former Fed chairwoman Janet Yellen as the new Treasury head in Biden’s possible administration sent stocks and the USD higher, pushing down all the undollars especially gold.
DXY firmed a little last night: The Australian dollar sagged: Gold broke support, oil rallied: Metals flamed out: Miners took off: EM stocks tried but failed: Junk was OK: Treasuries were sold: Stocks firmed modestly: Westpac has the wrap: Event Wrap US Markit PMIs rose to multi-year highs, against expectations for a fall. Manufacturing rose to
Stock markets are relatively buoyant across Asia despite Wall Street’s faltering steps on Friday night with Japanese markets closed and the economic calendar relatively quiet to start the week. Bitcoin is trying to push through the $19000 barrier while gold stabilises just above its recent lows, currently up a few dollars at the $1873USD per
Via FTAlphaville: Bitcoin’s price has been mooning in the wake of the US election, so much so it is nearing the record highs it set back in December 2017, at pixel time trading above $18,000: Speculation as to what is causing the run-up is rife. Some blame growing distrust in authority following the yet-to-be conceded
Risk sentiment tried to change course on Friday following a relatively solid Asian and European session as the stimulus problem in the US was exarcebated by a negligent Republican Senate and a divergence in views between Trump’s Treasury and the US Federal Reserve. The exponential spread of COVID-19 is still not registering on traders screens
Stock markets are mixed again throughout Asia going into the final session of the week, with only Chinese markets seeing any upside action as the Bitcoin climbs through $18000 again while gold stabilises just above its recent lows, currently at the $1867USD per ounce level: The Shanghai Composite is slowly eking out a positive session,
Risk sentiment is still very cautious as optimism over vaccines outweighs concerns over rising COVID cases and economic restrictions. Wall Street rallied on the close on rumors of possible stimulus progress in Congress (which is the opposite of progress I think someone once said). Looking at share markets in Asia from yesterday’s session where the
DXY was down last night: But the Australian dollar fell anyway: Gold weakened again, oil lifted: Metals are on a tear: Miners struggled: EM stocks did OK: Junk is back: Treasuries were bid: Stocks did the two-step reversion from value to growth as yields fell. Can’t lose: Westpac has the wrap: Event Wrap US weekly
Stock markets are somewhat mixed throughout Asia, with only Japanese bourses dragging the chain as the USD continues to strengthen against all the major currencies. Bitcoin has stalled again after its fightback yesterday while gold looks set to capitulate below its recent lows, slump to the $1860USD per ounce level: The Shanghai Composite was down
Risk markets remain poised between hope and fear, illustrated last night when the news of the Pfizer vaccine increased efficacy was unable to repeat the previous positive reaction, while additional COVID economic measures saw Wall Street stumble at the close. The USD was able to claw back some losses while Treasury yields lifted again, despite
Stock markets are quite mixed throughout Asia, although the local market is surging again, with further COVID cases in Japan partiuclarly weighing. Bitcoin gained and lost nearly $1000 in “value” in the last couple of hours while gold remains under pressure as its still unable to get back up to the $1900USD per ounce resistance
Bitcoin continues to outperform gold in recent price action: However, it still hasn’t broken its recent range: Will it? Today’s BofA fundie survey shows some rising acceptance of BTC: Anything is possible at this juncture. There is no reason why BTC is yoked to gold that I can see. It isn’t a safe haven. It
DXY kept falling last night and is at obvious support. Vice versa for EUR: The Australian dollar eased anyway: Oil and gold were stable: Metals were strong: Miners fell: EM stocks a little as well: Junk was OK: Treasuries bid: With the return of virus fears, value rotation reversed: Westpac has the wrap: Event Wrap
Stock markets still want to go higher here in Asia, but momentum is waning after being so overbought for so long. The news of a second potentially successful COVID vaccine has not been enough to embiggen spirits as expected. The weakening USD has stabilised slightly throughout the session with gold still under pressure as it
Nobody can stop the music on risk markets with more extensions of overbought rallies across the Atlantic overnight after solid sessions here in Asia yesterday. Another potentially successful vaccine against COVID was announced, but was tempered by record new daily cases throughout the US and Europe. The USD retreated slightly against most of the majors,
DXY was down last night: The Australian dollar is uber-bid once more: Oil was firm and gold weak in the circumstances: Metals are in heaven: Miners to the moon! EM stocks to the moon! Junk is fine: US yields lifted: Stocks too: Via the ABC: US drug manufacturer Moderna has released data that shows its
Stocks are being bid left right and center across Asia, although Australian traders should’ve had a long weekend since the ASX has had tech issues all day long, unable to trade. The USD has been largely weak against most of the majors although its coming back in afternoon trade, with Bitcoin having a nasty gap
Risk markets returned to a state of hopium on Friday night despite the disaster unfolding in Europe and the US as COVID infections go off the charts. Following the expected retracement in wildly overbought stocks, Wall Street rebounded despite a falling consumer confidence print alongside PPI inflation. The USD lost a little ground while commodities
DXY was down Friday night: The Australian dollar up: Oil fell. Gold pulled back from the cliff: Metals are powering on: Miners firmed: And EMs stocks: EM junk is signalling risk on: Treasuries softened: Stocks lifted: Markets are still happy to ignore the virus as it rips through developed markets and lockdowns intensify. There are
The expected retracement in wildly overbought stocks following the Pfizer vaccine surge continued overnight on both sides of the Atlantic. Defensive currencies like Yen and Swiss France are up while volatility in Kiwi continued following the RBNZ meeting. The flat US CPI print still gave the USD some strength, with the Aussie finally falling back
DXY was flat last night as EUR lifted: The Australian dollar was bashed anyway: Gold firmed but looks vulnerable: Oil fell: And metals: Plus miners: EM stocks were hit: Junk too: As the Treasury back-up reversed: Stocks fell too: Westpac has the wrap: Event Wrap US CPI inflation was flat in October (vs +0.1% expected), for
Vaccine volatility continues to pullback extremely overbought markets across the region – save Japan – with the USD gaining strength against most of the majors going into tonight’s inflation report. Gold is still under enormous pressure here after its big retracement, up slightly after revisiting its extreme lows at the $1869USD per ounce level:
Stock markets were moderately positive overnight although a return to strength for USD dampened some risk expectations, alongside the massive surge in COVID cases in the US and Europe. Dovish comments from ECB members sent Euro down while the Australian dollar slipped slightly as commodities were mixed, gold particular which returned to its post vaccine
DXY firmed last night: The Australian dollar fell: Gold looks precarious: Oil is trying amid a vast glut: Metals did OK: Miners are back from the dead: EM stocks firmed: Junk was strong: Treasuries were bid though it does not show on the chart: Stocks too: Westpac has the wrap: Event Wrap Ahead of the
Vaccine volatility has abated in mixed fashion across the region with Chinese shares unsettled, with not much action on currency markets except Kiwi which jumped on the RBNZ meeting. Gold is still plodding on after its big retracement, currently up slightly to the $1881USD per ounce level, still way off its prebreakdown high: The Shanghai