Australian Dollar

Overview of the price action in the fx market.

Technically, the dollar is looking a bit better.  Here is our assessment.

The Chief Economist at Citi Willem Butler has said today on CBC in an interview that the fiasco over the US budget and the lack of money is nothing more than irresponsible on all political wings and that the country is being run by Munchkins in the Land of Oz.

The USA is turning into a sorry state of affairs. But, it only has itself to blame. The successive governments for the past decades have done nothing but increase the debt ceiling in the country.

Overview of near-term dollar outlook.

The primary trend of the AUD is down. Bernanke has provided us the opportunity to sell the rally and profit from a primary trend continuation.

Dispassionate macro overview.

Earlier we noted the European economic 'recovery' is rolling over rapidly, and now - confirmed by Adidas - it seems the impact of weakening JPY and weakenig USD are starting to weigh on European companies:

• *ADIDAS CUTS 2013 NET INCOME FORECAST TO EU820M-850M RANGE (from EU890-920m)
• *ADIDAS CITES FURTHER WEAKENING OF SEVERAL CURRENCIES VS EURO

With EURJPY at four-year highs and EURUSD back at 2013 highs, it seems the reality of currency wars are coming home to Draghi - when's the next ECB meeting?

Even if one correctly predicts what the FOMC does next week, getting the direction right for dollar is a different matter.  The markets are anticipatory in nature and the effect often takes place before the cause.  

A dispassionate discussion of the weekend events and a look at the week ahead.  

Price action in the foreign exchange market in the context of fundamental developments.  Disappointing US jobs data clouds the near-term outlook for the greenback,  

The Fed is among the only major central banks not meeting next week, yet it is overshadowing the others.  The dollar's tone improved markedly in recent days.  There is still scope for the Fed to disappoint the dollar bulls.  

Quick, dispassionate overview of the fx market.

Anticipation of Fed tapering is being cited for both dollar gains and dollar losses.  What gives?

If you are a stock picker, then it’s basically now or never for whatever investment discipline you might follow.  Asset class and industry correlations have taken a surprising nosedive in recent weeks, which - as ConvergEx's Nick Colas notes. should allow your strategy/blend of magic to (hopefully) shine versus the benchmarks.  Average industry sector correlations to the S&P 500 have dropped to 69.9%, by far the lowest observation for over two years.  High yield bonds now show just 16% correlation to U.S. stocks, and the numbers for Emerging Markets (58%), EAFE stocks (76%), and currencies like the Australian dollar (11%) are also plumbing new lows.  Why the sudden return to a ‘Normal’ world? Expectations that the Federal Reserve will begin to ‘Taper’ its bond buying help, to be sure.  As do actual inflows (some $8 billion last month) into actively managed mutual funds.  We’ll have to wait and see if current trends continue, but for now we welcome the return of the ‘Stock picker’s market’.  Let the dart-throwing begin...