The US dollar sagged Friday night as EUR keeps pumping higher: That was enough to drive the Australian dollar higher against all DMs: It was mixed versus EMs: Gold is still deflating trade war safe haven trades so is missing the DXY input for now: Oil was calm: Copper firm: Miners soft: And EM stocks:
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.
Another mixed day on stock markets across Asia despite the solid lead from Wall Street overnight with currency markets relatively stable as the latest Chinese data came in better than expected. The Shanghai Composite failed to make good on the trifecta of releases, down nearly 0.6% going into the close at 2956 points while the
By Chris Becker Wall Street took back its previous mild losses overnight while European bourses were hesistant to move forward despite a supposed “new deal” for Brexit and a possible ceasefire in Syria. While US stocks gained, Treasuries gravitated around the 1.80% level again, as Brent and WTI crude oil prices lifted solidly on the
DXY slumped last night as EUR took off: The Australian dollar launched against DMs: And EMs: Gold rose: Oil too: Metals not so much: Nor big miners: EM stocks are breaking out: With junk: Treasuries were sold: Bunds bid: Aussie bonds belted: Stocks sure do look poised for higher: It was another double bunger evening
A somewhat mixed day on stock markets across Asia as the poor lead from Wall Street and the drop in USD overnight seeing sentiment shift from the positive mood at the start of the week. Today’s better than expected unemployment print saw the Aussie dollar jump while gold also rose among the undollar assets. The
Via Washington Post: U.S. and international law enforcement authorities have shut down one of the world’s largest child pornography websites following a raid and the arrest of Jong Woo Son, the underground site’s alleged South Korean-based administrator, federal officials said Wednesday. Federal prosecutors with the U.S. attorney’s office in Washington, D.C., and IRS and Homeland
By Chris Becker Wall Street pulled back slightly overnight with a mixed Europe also weighing on positive sentiment as retail data disappointed and UK CPI came in lower than expected. Lack of news on a looming Brexit deal kept the continental currencies elevated slightly, while the US retail sales print saw USD flop, spiking Aussie
DXY fell last night as EUR lifted: The Australian dollar was mixed against DMs: And EMs: Gold firmed: Oil too: Not metals: Nor miners: EM stocks are trying: So is junk: The Treasury curve flattened: And bunds: Aussie bonds copped it: And stocks eased: Westpac has the wrap: Event Wrap US Sep retail sales missed estimates, though this
Via S&P: China would probably agree to a side deal on currency policy if it rests on allowing market forces to play a greater role, said S&P Global Ratings today in a report titled “Trade Deal Entree With A Side Of Currency.” The U.S. has become fond of including currency provisions in its recent trade
A generally positive day across Asian risk markets excepting mainland China, following the good mood on Wall Street overnight. The Australian dollar continued to tank following yesterday’s release of the RBA minutes while the NZD was relatively stable despite an uptick in monthly CPI. Yen strengthened slightly after a big breakout in USD strength overnight
By Chris Becker The prospect of a potential Brexit deal and the partial US-China trade deal took stocks to a four week high despite the ongoing Turkish/Syria tensions. US Treasury yields jumped, pushing US stocks higher while commodity prices slipped as the USD was largely unchanged as Pound Sterling jumped to a near six month
DXY was sot last night: But the Australian dollar was even softer: It was mixed versus EMs: Gold was hit: Oil too: And metals: Plus miners: EM stocks bounced: And junk: Treasury’s were hosed: And Bunds: Aussie bonds did better: Stocks flew and are forming a bullish ascending triangle pattern: Westpac has the wrap: Event
DXY rebounded last night as EUR fell: The Australian dollar rolled over against DMs: EMs were even weaker: Gold has formed a downtrend: Oil reversed: And metals: Plus miners: And EM stocks: Junk did better: Bonds were mostly sold: Not Australia: Stocks held on grimly: Westpac has the evetn wrap: Event Wrap US NY (Empire)
Via Bill Evans at Westpac: Westpac is delighted that its currency forecasts which appear in summary in this weekly publication and in detail in the monthly publication – Market Outlook – have been extremely successful over the year to September (Westpac’s Bank Year). The surveys cover 50–60 banks which contribute forecasts to Bloomberg and are
So says RaboBank though the AUD is not listening today: LOL-A-PLAZA Summary: The US is reportedly weighing a bilateral currency accord with China as part of a trade agreement Our trade scepticism also holds if we focus just on the purported currency accord The US will insist on China committing to a stable or stronger
DXY sank last night as EUR and CNY ran: AUD took off versus DMs: And EMs: Gold sank: Oil jumped: Copper too: And big miners: Plus EM stocks: Junk was mixed: Bonds were poleaxed: Stocks climbed: Westpac has the event wrap: US Sep headline CPI was flat m/m, with ex-food and energy +0.1%m/m, missing estimates of +0.1%m/m and
More trade scuttlebutt this afternoon, via Bloomie: The White House is looking at rolling out a previously agreed currency pact with China as part of an early harvest deal that could also see a tariff increase next week suspended, according to people familiar with the discussions. The currency accord — which the U.S. said had
So says SCMP: Deputy-level trade talks between the US and China aimed at laying the groundwork for high-level negotiations later this week failed to yield any progress on critical issues, according to two sources with knowledge of the meetings. During the discussions on Monday and Tuesday in Washington, the Chinese refused to talk about forced
DXY was firm last night despite a rising EUR and CNY: The Australian dollar was weak versus DMs: And EMs: Gold rose: Oil hung on: Copper too: Big miners struggled: EM stocks did better: EM junk rolled: All bonds were sold: As stocks rebounded: Westpac has the event wrap: The FOMC minutes reflected a generally positive outlook
DXY was up last night as EUR fell: The Australian dollar fell against most DMs: But not so fast as EMs did: Gold bounced: Oil fell: And metals: Big miners look cooked: And EM stocks: Junk bifurcated: Treasuries were bid: And bunds: Not Aussie: Stocks got flogged late: Westpac has the event wrap: Sentiment soured
DXY firmed a little last night as EUR softened: The Australian dollar reversed downwards against DMs: But not so much as EMs: Oddly, gold, which has been a reliable buy in trade frictions, sank: Oil was roughly even: Copper firmed: Miners fell: And EM stocks: Junk did better: All bonds sold modestly: Stocks softened: Westpac
DXY was soft Friday night as EUR rallied: The Australian dollar lifted versus DMs: But lagged EMs: CFTC moved a little shorter: Gold firmed: Oil too: And metals: Big miners rallied: EM stocks too: And junk: Plus bonds: And stocks: Event wrap from Westpac: Event Wrap US non-farm payrolls were not as weak as markets had
Retail sales are out today and a range of indicators are suggesting less bad for August. From CBA: Retail Trade Preview – August 2019 ■ We estimate that the value of retail trade rose by 0.9% in August. ■ CBA’s Household Spending Intentions (HSI) measure, based on a sample of more than 2½ million households
DXY fell last night as EUR bounced. CNY is closed: The Australian dollar rebounded against DMs: Not so much against EMs: Gold firmed: Oil fell: Copper too: Big miners edged up: EM stocks too: Junk did better: Treasuries were golden: And bunds: Plus Aussie bonds: Stocks bounced: Westpac has the wrap: Event Wrap Following the
DXY was soft last night. EUR rebounded and CNY is flat: The Australian dollar was universally smashed but managed to rebound again versus USD: Gold jumped: Oil is deep trouble: Metals were soft: Big miners crashed: EM stocks ugly: US junk was bashed with oil. EM held up when it shouldn’t: Treasuries were gold: Bunds
DXY was down last night as EUR lifted. CNY was flat: The Australian dollar was universally bashed, including a brief post-GFC low against DXY: Gold rebounded: Oil sank: Metals too: And big miners: EM stocks are headed for a retest of the lows: Junk cracked: Treasuries were on fire: Bunds less so: Aussie bonds boomed:
The Australian dollar has so far gotten what was pretty clearly dovish message from the RBA statement. More cuts and/or QE are coming: Bonds are bid even if a bit slower on the uptake: Stocks like it too: Though not Big Iron which is down with more sell side downgrades. Those head and shoulders patterns