No Surprises for Australia
Let’s do a 12 month review of the situation in the US.
12 months ago, there was some element of hope.
12 months later, ugly is a better word, if we note the scale of the negative numbers for everything except Personal/Household wealth and of course, the labour market that appears to be creating more waitering and bar tending jobs for the laid off manufacturing workers.
And the US would be one of the few economies surprising on the downside from 3 months ago, apart from shocking Canada, but it has little to do the respective performances of currencies against the might USD.
All hail the mighty USD in its indefatigable run since mid 2014 and holding on to its gains for most of 2015 against every recognisable currency pair in the world that we can think of and even the HKD, pegged against the USD, suffered its biggest 2 day decline since 1992 just last Friday on speculation interest, down 0.5% against the USD which is less than what we can say for the AUD which has broken its weekly support at 0.6910 to look like there was be even more speculative depreciation in the week ahead.
AUDUSD weekly candlestick chart
What about the economic surprise ? Australia is sitting on top of the world as far as economic numbers are panning out, second to none in its rare positive happy spot, in a stark contrast to comparable economy, Canada. Hint : it is all about the jobs data as well that is counter intuitive to the common sense gauge of iron ore prices that most people use to punt the AUD.
It would appear that the world is in a rare panic mode for all of the days in 2016 that we have seen as we struggle to pinpoint the reason for the sudden mood swing, blaming everything from the Fed to oil to China without acknowledging that Speculation Is Not Dead !
After last weekend’s developments – China imposing reserves on offshore CNH deposit and the UN removing sanctions on Iran which has led to 7% and 5% drops in Saudi and Dubai stock markets on Sunday, Black Monday beckons except that it cannot be a black Monday on a US holiday.
18th Jan week looks set to be a trying time, ahead of the FOMC on the 28th of Jan (3 am SG time) and speculators would be out in force, on the 1st anniversary of the Swiss franc de-peg from the EUR last year on 15th Jan, the sudden SGD re-centring on 27th Jan and the subsequent market mayhem for all of 1H2015 with all rushing to cut rates till China crashed.