Asian stock markets are all lower on poorer risk sentiment as concerns about inflation stemming from last night’s Bank of Canada move and stirring bond markets continue to grow. This is spilling over into sour sentiment for Eureopan and US stocks heading into the London open, while the USD is remaining relatively strong against the
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.
A very late selloff on Wall Street reversed risk sentiment overnight with European markets also pulling back, denying a follow through on a mid week surge. The bond market is where all the action is with curve flattening and the 10 year US Treasury yields pulling back firmly, this time finishing just above the 1.5%
DXY eased overnight as EUR gained: Australian dollar rode the inflation panic: While commodities foretold the deflation shock to come: Big miners were thumped: EM stocks have rolled: Junk is still OK: The Treasury curve was hammered: That helped Growth but stocks were soft overall: Westpac has the wrap: Event Wrap Bank of Canada surprised markets
Asian stock markets are all lower on poorer risk sentiment as concerns about China’s property sector continue to grow. This is spilling over into sour sentiment for Eureopan and US stocks heading into the London open, while the USD is remaining relatively strong against the major currency pairs. Gold has slumped again, rejecting the overhead
Last night saw equity markets twitch moods with European bourses surging while Wall Street treaded water in the wake of more tech earnings, and while the latter did put in new nominal highs, its was literally only a handful of points. The USD remained strong against Euro and Pound Sterling while commodity currencies were a
DXY was firm again last night as EUR fell: The UAD had another strong night on today’s inflation print. A big yawn for me: Oil and gold fell: Base metals too on signs China is lifting metals processing output: Big miners fell as well: EM stocks have stalled: Junk bounced: But the Treasury curve looks
Last night saw Wall Street regain strength, particularly tech stocks, with the S&P500 putting in a new record high as concerns over the coming Fed taper dwindle once more. European and Asian markets were somewhat mixed, but are being dragged along for the ride with the USD keeping domestic currencies weak, with Euro dropping significantly
DXY firmed overnight as EUR sank: But the Australian dollar rose anyway: Oil was firm and gold lifted: Base metals held on: The key to the evening was energy. Both coal and LNG rebounded: Miners too: EM stocks held on: But the junk rally faded: Treasuries were all over the place: Stocks managed a modest
Asian stock markets are quite mixed with only local shares putting on any meaningful gains with Japanese shares losing ground in the face of a stronger Yen. Meanwhile the USD remains strong following Fed Chair Powell’s “time to taper” comments on Friday night with the Aussie weakening although gold is inching its way back above
Friday night saw Wall Street stand out as it fumbled over Fed Chair Powell’s hawkish comments over inflation. European and Asian markets however had solid finishes to the week, helped along by lower domestic currencies as USD strength continues to firm. Commodity markets were still rather bullish as oil prices made a new seven year
DXY was firm on Friday night and EUR soft: The Australian dollar was weak again: We got a good flush of shorts last week back to -76k but positioning remains very negative: Oil faded, gold firmed: Base metals kept falling as the energy bubble shudders: Miners managed a small bounce: EM stocks fell: Junk was
Asian stock markets are holding on to minor gains following the news of a debt payment made by Evergrande crisis with risk currencies lifting after getting pummeled by USD overnight. Japanese shares are pushing the hardest on their latest inflation print, while gold is inching its wayback to the $1800USD per ounce level. Meanwhile Bitcoin
Rush and and buy it because it’s more sound even than gold. Via Cryptowhale: Earlier this morning, many were shocked to find a massive red candle wick on the Bitcoin to US dollar charts. Around 3 dozen exchanges have seen a flash-crash ranging from $8400 to as low as under $4000. This mysterious flash-crash happened
Another mixed night on risk markets as Wall Street hits new record highs while European bourses stumbled around with minor losses as the USD reversed course and returned to strength. Commodity currencies took a small tumble as did Euro which returned to its start of week point with 10 year Treasury yields again spiking above
DXY rebounded last night and EUR sank: Australian dollar was bashed: Oil fell. Gold is dead: Base metals were slaughtered: Big miners cremated: EM stocks weak: Junk weaker: As yields lifted but the further out you go the flatter the curve: Which drove Growth: Westpac has the wrap: Event Wrap US initial weekly jobless claims fell
Asian stock markets are being weighed down by Chinese shares selling off in the wake of the Evergrande crisis with Japanese shares also down sharply. Currency markets are seeing a modest return to strength by the USD, although gold is itching higher trying to get back above the $1800USD per ounce level. Meanwhile Bitcoin has
It doesn’t really matter what the bubble is. If it is a genuine bubble then the path is always the same. First, some “genius” delivers a breakthrough product (like a CDO, for instance). First movers get in and make spectacular returns. The wider market remains skeptical but the stink of money begins to suck in
A relatively mixed night on risk markets and while Wall Street continued its corporate earnings inspired rally, the US Dollar Index (DXY) fell back against the majors, with the Kiwi and Australian dollar doing the most heavy lifting. Meanwhile Treasury yields pulled back from their recent near six month high with the 10 year still
DXY was hammered last night as EUR gained. The technical damage is limited but this tells us something about an easing safe-haven trade: The Australian dollar remains a one-way ticket up: Oil too: All commodities: But miners got plastered: EM stocks are still clawing their way back: As is junk: The US curve is suddenly
Asian stock markets are relatively mixed but bullish overall in response to the continued uptrend on Wall Street overnight, although concerns over Chinese energy supply and inflation continue to weigh with the latter to be brought to the fore with tonights dual European/non-European inflation prints. Gold is trying to reclaim lost ground again, returning to
A lack of economic releases or controversial Fed opinions through a spate of speeches overnight kept risk markets in line as While Wall Street continued to rally on solid corporate earnings results. The US Dollar Index (DXY) fell back against the majors, with Euro breaking out alongside the Aussie dollar while Treasury yields rose again
DXY is sinking just because. EUR is off the bottom: The Australian dollar is one way energy rocket to the moon: Oil won’t stop. Gold can’t start: Base metals flamed out though: As China dropped the jackboot on coal and Glencoal: EM stocks are back, baby! And junk: The US curve steepened: And stocks partied:
Asian stock markets are following the uptick in Wall Street with strong gains across the region as the USD loses significant ground against the major currencies, with the Australian dollar putting in a three month high on the back of the latest RBA Minutes. This is all essentially on technical breakouts as economic news is
While Wall Street continued to rally on solid corporate earnings results, European shares followed the wobbly Asian session with modest falls across the continent as inflation concerns continued to dominate. The US Dollar Index (DXY) was again unchanged, but Euro oscillated and commodity currencies pulled back slightly as the bond market also retreated as the
Asian stock markets are starting the week in mixed fashion as the latest Chinese GDP print undershoots expectations. Currency markets are holding on to their Friday night wobbles as inflation expectations are still reverberating around risk markets as the November Fed taper starts to weigh on trader’s minds. Meanwhile Bitcoin has almost matched its previous
Yet another solid night of corporate earnings on Wall Street has kept risk appetites full with a fine finish to the trading week on Friday night. The USD actually finished even against the majors and commodity currencies, with the defensive Yen underperforming while Aussie and Euro ceased their rebound promptly. The bond market actually lifted
Asian stock markets are finishing the week on a high note with green across the board in response to the continued rebound on Wall Street overnight. The reversal in USD strength has also continued, save for Yen which is weakening alongside risk markets, while gold hovers just below the $1800USD per ounce level. Meanwhile Bitcoin