Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Australian dollar melts-up into commodity mania

By David Llewellyn-SmithForexOct 12, 2021 09:29
Australian dollar melts-up into commodity mania
By David Llewellyn-Smith   |  Oct 12, 2021 09:29
Saved. See Saved Items.
This article has already been saved in your Saved Items

DXY is strong and EUR weak:


The Australian dollar is melting up regardless:

Chasing the energy melt-up:

As metals go with it:

Miners are back!

EM stocks are not:

EM junk has fallen through the trapdoor. Look out equities:

US bond markets were closed. Australian yields are moonshooting:

Westpac has the data:

Event Wrap

Danish CPI in September was slightly above consensus at 2.2%y/y (est. 2.1%), as was the case in Norway at 4.1%y/y (est. 3.9%).

ECB Chief Economist Lane repeated the mantra from Lagarde over patience regarding policy shifts. He also stressed the importance of wage outcomes, but that they would not react to “one-off” moves in wages. Against that, hawk Knot warned that investors need to consider inflation risks, even if the current moves are seen as “largely temporary”.

Event Outlook

Australia: September’s NAB business survey will provide an update on how businesses are faring through Australia’s lockdowns.

New Zealand: A 10% rebound is expected in September card spending, with subdued spending in Auckland offset by gains elsewhere. Ongoing border closures meanwhile continue to keep net migration at low levels.

UK: The ILO unemployment rate is expected to edge lower to 4.5% in August, headwinds from delta notwithstanding. In Europe, the September ZEW survey is also due.

US: The NFIB small business survey is likely to remain in robust health in September, with the experience of recovery offsetting lingering uncertainties over the outlook. The August JOLTS survey should continue to show strength in labour demand, highlighting that participation is the concern. The FOMC’s Bostic will then speak on inflation.

We’ve got a good old-fashioned melt-up underway. It’s driven entirely by energy. In particular, gas and coal which were insane again yesterday. Thermal coal:

Coking coal:

And LNG:

Other commodities are being sucked back into the mania on the basis that buying commodities is the only way to protect yourself from commodity inflation (yes, and the moon is made of cheese). This is leading China to cut metals processing output to ease its energy demand thus triggering commodity shortages and still more buying to protect yourself from commodity inflation.

This crazed melt-up can keep rising until either more energy becomes available or the energy prices themselves kill real economic demand (or something else does). My best guess is that both will happen roughly at the same time in a matter of a few months. The commodity melt-up will then crash back to earth in a parabolic fireball.

The Australian dollar is a helpless soul duck-taped to the outer shell of this lunatic rocket.

Australian dollar melts-up into commodity mania

Related Articles

Kathy Lien
FX: Watch UK And CA Rate Hike Bets By Kathy Lien - Oct 20, 2021

U.S. stocks extended their gains on Tuesday, and the improvement in risk appetite drove investors out of safe-haven currencies into riskier ones, which explains why the U.S. dollar...

Australian dollar melts-up into commodity mania

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Mark Derlo
Mark Derlo Oct 12, 2021 19:06
Saved. See Saved Items.
This comment has already been saved in your Saved Items
can you expand abit more on what do you mean by Australian dollar melt up ? And why would commodities price have such a big influence on the dollar ? Note that when the commodities keot going up , dollar seemed to live its own independent life
Chris Raymond
Chris Raymond Oct 12, 2021 10:35
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Melts up ? It was higher in September. Resistance will come in by 0.74
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email