AUSTRALIA FOCUS : HAPPY SHOPPING

AUD UPDATE

We are pretty close to the 6 year low of 0.7533 set on 3 April in the AUDUSD despite closing the week relatively unchanged and shorts are building up again as the RBA stood pat on Tuesday and let economic data do the talking.

Economic headlines :

  • Australian Retail Sales Stagnates
  • April Trade Deficit Blows Out to A$3.89 Bln The Largest on Record
  • AUSTRALIA WHEAT MAY FACE DRY GROWING SEASON ON EL NINO: MDA
  • Australia April Building Approvals Fall 4.4% M/M; Est 1.8% Fall
  • MOODY’S SEES POSSIBLE HEADWINDS AUSTRALIA BANKS ASSET QUALITY

Contrasting views on housing :

  • RBA’s Edey Says Sydney Home Market Overheated, a Risky Situation
  • RBA Should Hold Fire Amid Risk of Housing Market Drop : OECD
  • Australia Household Debt to Assets Lowest in 7 Years : ABA

This week has been a windfall for bond bargain hunting and shopping (no apologies for that retail sales number) with that 0.31% move up in 10Y AUD sovereign yields that has not happened in such magnitude since Jul 2013 when yields rose 0.37% within a week from a higher base rate which makes the % change much less.

Yet, I would not be complaining or running scared if I were an investor looking for that 5% yielding long end stuff I was looking for last week although I am not expecting bond prices to rally back too soon for too much capital gains.

As for the currency, I would not expect major shifts although the weeks ahead will be crucial as we head into mid year closing. The AUD would be part of the crowd buttressing the USD with the EUR taking the brunt of the force.

Whilst the CAD and EUR chipped some solid gains against the AUD for the week, I would point out that the GBPAUD is at a 5 year high closing the week above 2 to approach its last high of 2.09 back in 2009.

gbpaud

The AUDCNY levels make acquisitions continue to look cheap for the Chinese and asset sales will continue to keep the AUD supported, in my opinion.

Leaving with the indicative prices. Happy Shopping….

aud bonds