Australian Dollar

Risk is on but not for the Australian dollar which is retesting the lows again: There is only one reason for this today.

Asian stock markets are in retreat mode as USD swings into further strength going into tonight’s trading session.

Wall Street at first put in some solid gains overnight but they evaporated towards the close as risk sentiment dampened slightly, despite some good economic and pandemic data.

For now anyway.

Another solid day for Asian stock markets as the risk swing higher continues, although Chinese shares are stalling.

RBC kicks us off: AUD: The RBA left its policy targets unchanged, as expected.

Another green day on Asian stock markets as the Reddit fizzle continues, with sentiment firming and volatility waning, at least in equities.

A dove of immense proportions has perched upon Martin Place: At its meeting today, the Board decided to maintain the targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility.

Wall Street rebounded overnight as the Gamestop short squeeze eased off and sights were set on silver instead.

Via Morgan Stanley: The CI tries to identify whether a market is trending or consolidating by dividing the actual percentage the market has moved in the past number of days by the extreme range it has moved over the same number of days.

It’s been a much better start to the trading week then many thought possible with S&P futures indicating a 1% drop at least across Asian stock markets on the open, with many risk currencies gapping down this morning, before a swift reversal has seen risk come back much stronger.

The short squeeze continued on Wall Street Friday night as the Gamestop debacle spilled over into a selloff across the board on both sides of the Atlantic as nominal gains for the year evaporated.

Well, that was a fun night!

Via Credit Suisse: As we highlighted in our Key Themes for 2021, bearish the USD remains a core theme for 2021, but a consolidation/recovery phase was expected in the early part of the year following the fall to our first core bear target and major support from the 2018 low.

A sea of red out there on Asian stock markets in response to the largish falls on Wall Street overnight from a crazy short squeeze as the professionals (sic) continue to clutch their pearls as Redditors and Robinhooders go after their next target.

Wall Street’s wobble in the previous session has turned into a full rout overnight with short-exposed hedge funds tipping the major bourses deep into the red.

The Australian dollar took a pounding last night: As DXY surged off a little head and shoulders bottom: Westpac has the wrap: Event Wrap The US Federal Reserve’s FOMC left its policy settings unchanged as was widely expected: a 0%-0.25% Fed funds rate range,  and at least $120 bn/month bond purchases.

Risk is wavering throughout Asian stock markets with only Japanese stocks advancing as the USD firms against most of the major currencies in the lead up to tonight’s Federal Reserve meeting.

Via Citi: Monday saw hawkish messaging from a White House press conference on China relations as outlined here.

Last night saw a wobble in Wall Street despite the IMF upgrading global economic growth projections and a fall in the USD.

Risk is back on the table with Asian stock markets up across the board as the USD reverses its short term strengthening as we start another trading week and look towards the FOMC meeting.

Friday night saw the release of the latest PMI surveys on both sides of the Atlantic, with the US print unexpectedly higher but that economic recovery didn’t help risk markets higher with Wall Street finishing the trading week on a sour note.

From Friday: Current yuan exchange rate is within a reasonable and balanced range,” the State Administration of Foreign Exchange (SAFE), China’s fx regulator, said in a statement on Friday.