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- Nov, 20 USD Graphic Rewind
- Nov, 20 Opening Comment
- Nov, 20 Overnight Interest Rate Update 11.19.09
- Nov, 19 Japanese Yen Benefits on Risk Aversion, New Zealand Dollar Falters
- Nov, 19 U.K. Public Budget Posts Highest Short-Fall Since 1993
- Nov, 19 Overnight Interest Rate Update 11.19.09
- Nov, 18 Swiss Franc Strengthens on U.S. Dollar Weakness, British Pound Falters
- Nov, 18 Canadian Consumer Prices Expand for the First Time in 5 Months
- Nov, 18 Opening Comment
- Nov, 18 Overnight Interst Rate Update 11.18.09
- Nov, 17 British Pound Remains Bid, Canadian Dollar Underperforms
- Nov, 17 U.K. Inflation Tops Forecast
- Nov, 17 Overnight Interest Rate Update 11.17.09
- Nov, 17 USD Graphic Rewind
- Nov, 16 Canadian Dollar Outperforms, Japanese Yen Lags Behind
- Nov, 16 Euro-Zone Consumer Prices Weaken For Fifth Month in October
- Nov, 16 Overnight Interest Rate Update 11.16.09
- Nov, 13 US Confidence Falls for Second Month
- Nov, 13 Overnight Interest Rate Update 11.13.09
- Nov, 13 German GDP Posts 2nd Quarterly Advance; Rises to 0.7%
OPENING COMMENT
The Asian session of trade has the buck trading slightly lower for the most part on the day, with only the Australian Dollar putting in some more substantial gains to yet another 2009 high, on the back of another round of impressive data. While the unemployment rate in Australia remained steady at 5.8%, the jobs data came in much stronger at +24.5k after the markets had been looking for a -10.0k print. The single currency managed to retain its strong bid tone, even in the face of Treasurer Swan comments that Australia would only gradually withdraw its stimulus over time. While Kiwi was initially dragged higher in sympathy, the single currency could not hold onto any meaningful gains, with the release of some weaker retail sales data. Also seen knocking the wind of Kiwi bulls were New Zealand FinMin comments that Kiwi was “quite high” relative to the USD and this was having a detrimental impact on exports.
While many favor to continue to buy the Australian Dollar, we hold a minority opinion that the currency is well overvalued at current levels. Market participants have grown to rely too comfortably on a currency that is heavily dependent on anything but domestic fundamentals. The real driver of the currency has been nothing short of favorable yield differentials, rising commodity prices and a large bet on the prospects for the Chinese economy, all of which could easily change in an instant. While it is true that data within the local economy has been solid, we still contend that Australia has yet to fully realize the impact of the global recession and will indeed be faced with some serious constraints in the event of any form of a hiccup within the global economy over the coming months. Data in the region has also consistently come in better than expected for the most part, which raises some questions as to just how properly expectations are being managed. In the end, the market is the market and while we can speculate all we want, the market will continue to push the Australian Dollar higher until it and only it decides otherwise.
Looking ahead, The ECB will publish its Monthly Bulletin at 9:00GMT, with Swiss ZEW and Eurozone industrial production (0.50% expected) due out at 10:00GMT. US equity futures are currently pointing to a lower open, while commodities are only slightly bid.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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