Via the excellent gents at Nordea: Could Bitcoin undermine the dollar and the United States? Perhaps. We do see reasons to mull the long-term value of the dollar – not primarily because of cryptocurrencies, but due the country’s economic-political choices and China’s continued rise… Investor and entrepreneur Peter Thiel recently wondered if not “Bitcoin should … be
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.
The Australian dollar enjoyed another strong night after yesterday’s solid data and overnight’s ongoing risk melt-up: The Australian dollar is up and away again though well short of previous highs: Oil and gold have made friends again: Base metals metals flew: Big miners too: But EM stocks remain under pressure from Chinese tightening: The to
As the US prepares its annual currency manipulators report, TD Securities takes at a look at who’s doing the dodgy: Asia’s Currency Manipulators •The US Treasury Report on trading partners’ FX policies is likely to be released soon, possibly this week. In the period since the timeframe covered in thelastReportwe think USD buying FX intervention
Credit Suisse with the note: April thus far has seen global equity markets in the main continue their steady march higher, led as usual by the pied piper of US equity markets. The laggards / losers have been the likes of Chinese, Indian, Russian and Turkish equities, which reflect local problems linked to covid spikes,
UBS has summed up my view on gold pretty well: We forecast a further weakening of gold (USD 1,600/oz end-2021) and recommend investors manage their gold positions more actively. Investors who hold gold strategically and don’t want to protect against near-term downside can pick up an additional yield by systematically selling the upside potential. Our
DXY took a hit for the global team last night as US inflation printed high but nowhere near high enough on core measures to upset the market applecart. EUR jumped: The Australian dollar was firm against DXY but weak elsewhere. This was not a sudden shift to bullishness: Brent firmed with gold: Base metals were
It was an evening of paralysis for the Australian dollar as markets wait for key US data. The same goes for DXY: The Australian dollar was overall weak versus developed markets: Westpac has the data wrap: Event Wrap FOMC member Bullard said that while it was too early to start taking about changing policy, and he would leave
The Australian dollar broke into the 75s again Friday night before rebounding. DXY rebounded and EUR fell with all of the usual outcomes. To the charts. DXY versus EUR: The Australian dollar is forming new downtrends against all of the major forex pairs. Not a good sign: It is more mixed against EMs but even
The Australian dollar was stronger last night as the global stock surge carries on. The trigger is a distinct easing in the bond back-up as virus concerns, a still dovish Fed and flamed out oil combine to suppress inflation concerns. DXY was weak and EUR strong: Despite the rally, the Australian dollar is still stuck
DXY took a hammering last night as US yields fell back from the recent charge higher. We saw all of the usual resulted with EM, commodities and Australian dollar up strongly. I see this as a counter-trend rally. To the charts! DXY vs EUR: The Australian dollar lifted away from the neckline of its perilous
Pre-Easter trading had a still strong US dollar as jobs growth accelerated dramatically. Nonetheless, the Australian dollar held at the bottom of its recent trading range around 76 cents. Then last night the US dollar swooned as oil was whacked. To the charts: The Australian dollar held the neckline of its head-and-shoulders top again: Oil
Asian share markets are moving higher going into the Easter break with the firmer lead from Wall Street and some better than expected economic prints helping risk sentiment. Bitcoin is again relatively strong but remains unchanged as it finds more resistance at the $59K level while gold is poised here to breakout higher on its
President Biden’s new big infrastructure plan didn’t shake up markets as expected with Wall Street absorbing the proposed tax increases while the USD finally gave up some ground against the major currencies after being super strong all week. Treasury yields fell back slightly again but still remain above the 1.7% level as commodity prices were
The Australian dollar was weak overnight despite a powerful relief rally for anything and everything that has been recently squashed by rising US yields and greenback. DXY eased as EUR rose: The Australian dollar could not catch a bid and still sits right on the neckline of its head-and-shoulders topping pattern: Gold did better and
Asian share markets are pulling back despite very solid manufacturing PMI prints in China and the end of fiscal year window dressing in Japan. Bitcoin is again relatively strong but remains unchanged and elevated above the $58K level as it tries to get back above its recent record high above $60K: The Shanghai Composite started
Sometimes correlation is not causation. Take this from Citi: USD strength Last week’s major themes in spot FX include:·USD strengthened broadly (0.9% in broad NEER terms; BBDXY up 0.7%; EURUSD down 0.9%) against major currencies as rising concerns around third Covid wave paused the reopening optimism and led to risk reduction across markets, although the
It was a case of repeated expectations overnight on share markets at least, with the mixed Asian lead not upsetting the continued rise in European markets while Wall Street stumbled yet again in the wake of new tax increases for Biden’s new big infrastructure plan. The USD made another high, pushing Euro and the Aussie
The Australian dollar was crushed by a runaway greenback steamroller last night as US economic data begins to bubble. DXY was rampant as EUR fell: The Australian dollar was crushed back to the neckline of its head-and-shoulders topping pattern. Though it has still not broken: Oil was hit and gold smashed: Metals were all flattened:
Asian share markets are again quite mixed with Japanese stocks this time not moving while local shares pull back inline with the Brisbane (and greater QLD?) lockdowns, while Chinese shares surge. Bitcoin remains relatively strong but unchanged above the $57K level while gold is really struggling here after collapsing overnight and is now threatening the
The Australian dollar is clinging grimly to the clifftop as last night the DXY rallied on and EUR fell: The Australian dollar has backed away from the neckline of its monstrous head-and-shoulders top: Yields kept piling higher: Stocks are going exactly as expected with Nasdaq still deflating while value trades hold up wider bourses. Expect
Asian share markets have started the trading week in mixed fashion with today’s session seeing most markets pulling back and only Japanese stocks advancing. Bitcoin gapped higher, continuing its Friday session bounce to almost punch through the $55K level but still remains in a weekly downtrend after rebuffing the $60K level: The Shanghai Composite is
Ain’t this the truth from Nordea: The past week has seen the S&P500 future, Nasdaq and Brent oil prices primarily ranging sideways amidst choppy price-action. Aside from higher yields worrying investors – which has been the case on and off for the past few months, investors now also have to think about the direction of
Friday night saw risk sentiment firm once again going into the end quarter/month as the hastened pace of the vaccine rollout in the US embiggened economic efforts as the Fed gave US banks the go ahead to increase dividends. This lead to another record high on Wall Street will seal the deal for Asian stocks
Friday night saw a weaker DXY which helped drive a pop in the Australian dollar and risk assets generally: Brent jumped out of its swoon. Gold is hanging on: Base metals all partied: Miners went along for the ride: EMs stocks too though they still dangerously caught in a downdraft: Junk is fine. No Fed
Risk sentiment came back overnight with both European and Wall Street bouncing back as volatility on bond markets pulled back slightly and the USD continued to lift on the back of strong initial jobless claims overnight. Concerns over the Suez canal supply blockage continue to rattle commodity markets, with oil dropping 4% and copper down
Capitulation by Australian dollar analysts that is. Last night the US dollar poured on the heat as it powered higher on its emerging growth, inflation and yield exceptionalism: The Australian dollar is sitting right on the partially broken neckline of its monstrous head-and-shoulders top: The newsflow was roughly unchanged with Europe falling back into the