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

Australian dollar stumbles towards cliff edge

au.investing.com/analysis/australian-dollar-stumbles-towards-cliff-edge-200493115
Australian dollar stumbles towards cliff edge
By David Llewellyn-Smith   |  Nov 25, 2021 09:21
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The assault upon the Australian dollar is coming from a tearaway DXY as EUR wilts:

 

The Australian dollar was universally weak. It’s chart is forming up a bearish descending triangle retest of the lows:

Oil was firm, gold not:

Energy is spiking again thanks to European gas and that is keeping metals afloat:

Big miners were largely flat:

EM stocks look ugly:

Junk too, with US now trailing EM down:

As short-end US yields crush the curve:

Which is keeping GAMMA alive:

Westpac has the wrap:

Event Wrap

The second estimate of US Q3 GDP was near expectations, up to 2.1%q/q annualised (from 2.0%, est. 2.2%). Personal consumption edged up to 1.7%q/q annualised from 1.6%.
Core PCE remained at 4.5% (while headline PCE ticked up to 5.9% from 5.7%). Durable goods orders fell 0.5%m/m (est. -0.2%m/m), but ex transport rose +0.5% as expected. Personal Income rose 0.5%m/m (est. +0.2%m/m), with spending up 1.3%m/m (est. +1.0%m/m). The core PCE deflator was in line with expectations at +4.1%y/y. University of Michigan consumer sentiment survey improved marginally from its surprisingly weak initial release, lifting to 67.5 from 66.8 (est. 67.0). Inflation expectations were unchanged from the initial release (4.9% 1yr, 3.0%  5yr). New home sales at 745k (est. 800k) were little changed from a downwardly revised 742k (prior 800k), but these remain at historically high levels. Initial jobless claims fell to a multi decade low (since 1969) of 199k (est. 260k), with continuous claims at 2.05m (est. 2.03m).

German IFO business climate survey fell to 96.5 (est. 96.7, prior 97.7), with a larger fall in expectations to 94.2 (est. 94.6, prior 95.4),the current assessment in line at 99.0 (prior 100.2). French business confidence edged up to 114 from 112 (est. 112).

The UK CBI trends survey was stronger than expected. Headline orders rose to a record high of 26 (est. 8, prior 9), while selling prices rose to their highest since 1977 at 67 (est. 57, prior 59). Solid orders and optimism despite supply constraints and pricing pressures were noted.

Event Outlook

Aust: Investment disruptions caused by Australia’s extended delta lockdowns are expected to produce a sizeable dip in Q3 private new capital expenditure (Westpac f/c: -4.8%). 2020/21 capex plans should be positive, though Covid delays are likely to result in a sub-par upgrade estimate 3 to 4.Oct 30 weekly payrolls will give an indication of the employment boost from reopening.

NZ: A seasonal increase in agricultural exports is expected to lend some help in narrowing October’s trade deficit (Westpac f/c: -$1280m).

US: Observes Thanksgiving Day holiday.

Note that the last time DXY reset higher on interest rate expectations like this was in 2015 and 2018. Both culminated in EM and commodity crashes that ultimately fed back into DM stocks to stop the Fed hiking.

Both episodes also crashed the AUD.

I see no reason why we won’t repeat the pattern over 2022 with prejudice given a higher base for inflation, the US fiscal tailwind, China’s structural slowdown and Australia’s determination to jump back into the profits, wages and inflation black hole of the population ponzi.

Australian dollar stumbles towards cliff edge
 

Related Articles

Australian dollar stumbles towards cliff edge

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 Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
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?
 
Post
 
Replace the attached chart with a new chart ?
1000
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 Investing.com'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
or
Sign up with Email