Bears take another pound of flesh from AUDUSD

9 February, 2015

Bulls flocked to the US dollar on the back of last week’s jobs numbers and bears mauled AUD after some very soft Chinese trade numbers, which has firmly cemented AUDUSD’s position below 0.8000. It appears the pair cannot catch a breath as it grapples with weakening economic conditions in Australia and China at a time when the US labour market data continues to go from strength to strength.

China’s monthly trade balance was pushed to a record $60.03bn by a dismal 19.9% y/y fall in imports (expected -3.2%). Lower import prices can partly explain January’s soft import numbers, but we still can’t excuse them. The slide in imports is the worst since Chinese factories were slashing inventories in response to the GFC, thus it’s not surprising alarm bells are ringing. Also, exports fell for the first time since March 2014 (actual -3.3% y/y vs. expected 5.9% y/y) and they are the only thing propping up growth at the moment.

The demise of Chinese economic data isn’t the only thing weighing on the commodity-backed Australian dollar. In fact, the bearish outlook for the Australian dollar comes from both soft international and domestic indicators. A softening monetary policy outlook in Australia due to deteriorating domestic economic conditions, falling commodity prices and a depressed outlook for China’s economy is a big weight for the Australian dollar to carry.

US jobs report

Last week’s stellar US jobs report has reinvigorated dollar bulls. The combination of continued strong employment growth and encouraging wage growth cannot be ignored by the market and it reaffirmed the Fed’s decision to upgrade its assessment of the US labour market to strong from solid. It is now looking increasingly likely that the Fed will be raising rates sooner rather than later (more and more pundits are calling for a June hike). Yet, a weak core inflation outlook gives the Fed a lot of breathing room, which may be partly why there is such a large divergence between the market’s expectations for rates and the Fed’s.

Even given the recent strength in the US dollar, it’s hard to see it loosing much ground against some of the majors, especially those that have central banks that are actively loosening monetary policy. The euro and the yen are looking particularly soft at the moment against the US dollar, and this isn’t expected to change in the near-term.


Source link  
Gold surges to major $1250 resistance as uncertainty prevails

Gold surged Thursday on a breakout of its previous consolidation to hit and slightly exceed major technical resistance at $1250, a level not seen since early November...

Gold remains vulnerable amid hawkish Fed, strong dollar, equity highs

Gold has climbed sharply since the beginning of the year as the US dollar has pulled back from its late-2016 highs and the US Federal Reserve has exercised characteristic restraint in raising interest rates further after the last rate hike in December...

Gold well-supported on safe-haven flows, lagging dollar

Increasing political and economic uncertainties under the new Trump Administration, coupled with a sliding US dollar since the beginning of the year, have led to a sharp rise in gold prices for more than a month...


Gold pressured as dollar and equities remain supported

As the US dollar found some new life on Thursday and US equity markets hovered right around their new all-time highs, gold extended its recent pullback well below the $1200 handle. Since late December, the price of gold had been in a sharp relief rally from its 10-month lows around $1125 support...

Crude oil maintains bullish trend

Oil prices were initially weaker at the start of the new week, but they have now recovered to trade almost flat at the time of this writing. At the weekend, the OPEC and some producers outside of the group met to discuss the progress of their oil production deal...

Trump press conference fails to deter equity bulls

President-Elect Donald Trump spoke on Wednesday morning at his first formal press conference since the November elections, and the markets were all ears. Trump covered a lot of ground with multiple topics that included...


Gold ripe for potential relief rally

The charts tell a clear story of the unrelenting plunge in gold prices since early November. This steep dive has been the result of several related factors, all of which have the potential to extend well into the new year. These largely Trump-driven factors include...

Could EUR/USD finally break 1.05 on this FOMC day?

The market is demanding a rate rise and the Fed better deliver it today, for if it doesn’t the bank’s credibly will be severely damaged. There is really no excuse not to do so. Economic data has been improving, financial markets are calm...

Mixed Jobs Report Keeps High Fed Expectations Intact

As we noted the day before Friday’s US jobs report, only a significantly worse-than-expected reading for November would have likely made the Federal Reserve’s next interest rate decision more difficult...

  


Share: