Australia In Focus : Outsourced To The World

 

AUD UPDATEA big apology for the updates because I just discovered that the 1wk change number for iron ore has not been updating. The problem has been fixed.

The Australian dollar is not really itself these days, moving to China on Monday, its unemployment on Thurs and for the rest of the time, moving only in European and US hours.

Vertical lines denote when the Australian market closes.

Vertical lines denote when the Australian market closes.

 

That Australia and New Zealand are deeply connected to Asia still makes the Australian dollar the best Asian EM proxy around other than the Singapore dollar, which is not an international currency.

australia new zealand and asiaI see the recovery in commodity prices this week that was led by oil prices as a small respite because the fact is that we shall be seeing more mines consolidate or shut even as Iron Ore records this year’s largest weekly gain.

I had anticipated a short squeeze in the currency this week but the likelihood of sustained strength remains in question and I suspect we will float in this choppy range as we head into Grexit next week, when the Greek FM, Varoufakis, meets with the Eurozone finance ministers. *Do note that the AUDUSD weekly chart closed at its highest in 7 weeks.

And my personal conspiracy theory is that the RBA is waiting for a strong currency when they finally decide to cut – fingers crossed till 6 May.

Next week we shall see Mar CPI (22 April 930 am SG) which should give us some nice volatility because expectations are low and there is nothing out of China to cause too much scare.

I am still not bullish on bonds (the bond curve is still inverted to 5 years) and the stock market as yet because it is getting clear that Australian markets are outsourced to the rest of the world.

Leaving with the indicative prices.

aud bonds