Australian dollar tumbles as “risk-off” sirens wail
David Llewellyn-Smith | Sep 29, 2021 09:45
The greenback is breaking out as the energy crisis combines with a China hard landing to scatter the risk cockroaches. EUR is near breakdown:
Australian dollar was flattened by the greenback steamroller:
Gold too. Oil fell back:
Base metals were soft:
Big miners were slaughtered, ex-coal junkie Glencore (LON:GLEN):
EM stocks are headed for Hades:
The EM junk “risk-off” siren is wailing:
Get The App
As Wall Street’s energy bubble backs up yields:
Pounding stocks:
Westpac has the wrap:
Event Wrap
In the US, attempts to break the deadlock on the debt ceiling continued with both Yellen and Powell warning of the negative effects on the economy from failure to find agreement. Yellen suggested that the debt ceiling would be hit by 18 October. They both also referred to supply chain bottlenecks leading to more protracted, if still transitory, inflation pressures into 2022.
US Conference Board consumer confidence fell to 109.3 (est. 115.0, prior 115.2). The CoreLogic house price index in July rose 19.95%y/y (est. +20.0%y/y). The Richmond Fed activity survey slumped to -3 (est. 10, prior 9 and July peak of 27), with a notable large decline in new orders to -19 from prior 5 (its first below sub- zero reading since May 2020). Despite the slide in activity and further increases in prices paid, firms remained relatively optimistic.
GfK’s consumer confidence survey for Germany was firmer at +0.3 (est. -1.4, prior-1.1), as was French consumer confidence at 102 (est. 100, prior 99).
Event Outlook
Euro Area: Supply constraints and shipping capacity may be headwinds for economic confidence in September (market f/c: 116.9).
US: Pending home sales in August are due for a slight uptick, with supply still a constraint (market f/c: 1.0%). Further, the FOMC’s Bullard and Bostic will provide their respective views on the economy.
There is nothing good about the market and AUD outlook today. The short-term stagflation represented in the energy bubble is inflating headlong into a giant pincer of pins in the form of a Chinese hard landing and a Fed determined to taper. The three cannot co-exist and, in my view, the bearish forces will win in due course.
For the AUD over the next few months, that means it is either under pressure from a running DXY or under pressure from a deflating energy bubble, or under pressure from both.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.