Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Australian dollar smashed by Chinese recovery
Australian dollar smashed by Chinese recovery
By David Llewellyn-Smith   |  Jun 29, 2022 10:16
Saved. See Saved Items.
This article has already been saved in your Saved Items

DXY was strong last night:


AUD was squashed:

Oil up!

Metals struggled:

Miners (LON:GLEN) dead catted some more:

Not EM stocks (NYSE:EEM):

And junk (NYSE:HYG) is on the express elevator to hell with everything else soon to follow:

Treasuries were bid:

Stocks were smashed:

Westpac has the wrap:

Event Wrap

US Conference Board consumer confidence fell to 98.7 (est. 100.0, prior revised from 106.4 to 103.2), led by decidedly softer expectations (66.4, prior revised to 73.7 from 77.5).
The Richmond Fed manufacturing activity survey fell to -19 (est. -7, prior -9), similar to the weakness seen in yesterday’s Dallas Fed survey. New orders fell to -38 from -16, and shipments fell to -29 from -14. Wages remained elevated, while there were early signs of supply chain relief and receding prices. US housing data for April was mixed but close to estimates. FHFA prices rose +1.6%m/m (est. +1.4%m/m), and CoreLogic’s rose +1.8%m/m (est. +1.9%m/m).

FOMC member Williams said the Fed needs to get to a 3% to 3.5% funds rate this year, and the debate at the July 26-27 FOMC will be about 50bp vs 75bp. He believes rates will get into restrictive territory in 2023, and expects the economy to slow enough to push the unemployment rate a little above 4%, but a recession this year is not his base case. Bullard published an essay on inflation, noting that getting ahead of inflation will keep it low and stable and promote a strong real economy. He noted the lessons learned from the 1974, 1983, and the 1994-5 experiences, concluding that the latter two approaches were the better examples to follow.

ECB President Lagarde said that they would take the first step of applying flexibility in reinvesting maturities and coupons from PEPP to counter “fragmentation” pressures from 1July.

Event Outlook

Aust: A softer gain is anticipated in May’s retail sales as spending rotates towards non-retail items (Westpac f/c: 0.3%).

Eur: Economic and consumer confidence should continue to be affected by the Russia-Ukraine conflict and historically elevated prices in June.

US: The final estimate for Q1 GDP is due (market f/c: -1.5%). Meanwhile, FOMC Chair Powell will participate in a panel at the ECB’s Central Banking forum. The FOMC’s Mester will also speak at the forum and Bullard is due to speak at a different event.

The Chinese victory over OMICRON, such as it is, fired up oil as it lifted some travel restrictions.

Needless to say, any Chinese oil demand recovery of substance is very bad news for the global economy. It will force the Fed to hollow out demand with higher rates to crash the oil price.

Indeed, China itself is running on the spot here as it lifts domestic demand only to see its external demand smashed. That’s the reality of today’s oil resource limitation.

As I have said before, it really is the Fed versus oil now and yesterday the Fed lost.

As for Australia, there was a time when higher commodity prices were seen to benefit the local economy and lifted the AUD.

That time is long past as energy inflation runs rampant everywhere and the only place to hide is King Dollar.

Australian dollar smashed by Chinese recovery

Related Articles

David Bassanese
On Song By David Bassanese - Aug 08, 2022

Week in review It was a mixed week for global markets, with investors still unsure whether to laugh or cry about the fact the US is not yet in recession. After some early fleeting...

Australian dollar smashed by Chinese recovery

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.
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
Continue with Google
Sign up with Email