Australian Dollar

Has the Australian dollar already topped? Most on Wall Street do not think so. JPM sees the recent correction as over: I had written extensively last week about the dislocation between G10 FX (lower) and stocks (higher) and on Friday we saw that correct in style as the USD sold off everywhere.

Asian stock markets are following the strong lead from Wall Street on Friday night with surges across the region, as USD remains weak following its shutdown post the very weak US unemployment print.

Since the great 2020 COVID-crash in markets, there has been an increasing siren song for a new supercycle in commodities.

Via DoubleLine: For every action, there is an equal and opposite reaction.

The US unemployment print was bad, which is good for stocks, bad for USD so we saw a continuation of the rally in equities while a big reversal in USD fortunes jolted the currency markets.

The Australian dollar made up for lost time versus broader risk Friday night: The trigger was bad news being good news in US jobs following the virus third wave:    The unemployment rate fell by 0.4 percentage point to 6.3 percent in January, while nonfarm payroll employment changed little (+49,000), the U.S.

Asian stock markets have swung back in confidence as USD swings into further strength going into tonight’s non-farm payroll (NFP) aka US unemployment print.

It’s all about King Dollar overnight with Wall Street regaining its former highs while OPEC+ commitment on supply saw oil break out to new post-COVID highs as Euro and gold dove off a cliff.

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.