AUSTRALIA IN FOCUS : A TRIBUTE TO MOUNT EVEREST

A cheeky interpretation of the AUDUSD chart for the week as a solemn tribute to the devastation in Nepal.

And my eagle eyes tell me that the candlestick on 28 April is the longest one we have seen since Feb last year as the poor AUD dollar got whipped about by the massive moves in the EUR and the NZD.

For we broke 0.80 in the AUDUSD, a 3 month high, but failed to hold, closing the week where we started.

Bond prices also took a tumble along with US treasuries and bunds even though we have the RBA almost certainly cutting the cash rate next week (5 May 1230 PM SG time).

The plan to stay out of AUD bonds was good as we note that the 10Y yield has corrected up 0.3% from 2 weeks ago (5Y +0.19%). https://tradehaven.net/market/australia-in-focus-outsourced-to-the-world/

I expect currency weakness to continue and volatility to remain on extreme, noting that the most volatile days in the past 12 mths has concentrated in Mar-Apr 15.

At this rate, we should see capitulation into May regardless of RBA’s actions because a cut is inevitable with the RBA commodity price index falling sharply to a 5 year low.

Thus, while the case for re-entering the bond trade is building, it remain prudent to be on the side as global adjustments continue in the week ahead after this long weekend (Ldn and Japan out on Monday). In other words, it is impossible to time the AUD market advantageously without assessing the going ons in China and Europe, as we mentioned 2 weeks ago that their markets are “out sourced” to the world.

And because I do not treat the AUDNZD as a civilised currency pair, with reserved opinions, I shall leave you with the indicative prices.