Hosed – that’s what happened to Aussie dollar bulls last night with the aggressive intervention from RBA Governor Stevens who has reiterated that he wants the AUDUSD back at 85 cents rather than with a 90 cent handle on it.
I got blind sided by the big move and have been hosed off myself.
Stevens gave a wide ranging interview to the AFR this morning. The key is he just wants the Aussie lower so he doesn’t have to lower rates and I think he might be worried about a stronger Aussie picking up with global growth next year.
Stevens is being super aggressive and interventionist at the moment toward not only the Aussie, which he managed to crush last night, but also property prices and even the Holden saga. Stevens is being uncommonly interventionist for an RBA Governor – he is clearly worried about something.
The big impact of his jawboning was that the Aussie dollar is back below 90 cents at 0.8936 this morning, down 1.24% on the day and more than 200 points from the high of the week. You can read more on his comments here. Some are saying the Aussie fall was about retail sales in the US, but given the Aussie move is so much bigger than the euro (1.3742, -0.32%), GBP (1.6343, 0.19%) and even the Yen (USDJPY 103.23, +0.80%), suggests it’s not just about the US dollar.
Clearly the head and shoulder pattern we have been using for a while now is almost complete with only about 1 cent to go before perfection but in terms of the weekly down trend support is now at 0.8740 so its still a good 200 points away.
Turning to stocks at the close the Dow is off the lows but still down 104 points or 0.65% at 15,745. The Nasdaq is down 0.15%, while the S&P is down just 6 points to 1,776. Initial jobless claims jumped sharply in the US, up 68,000 on the previous week, but the number was confused by Thanksgiving, apparently. Retail sales were also out and rose 0.4%, ex-autos eclipsing the 0.2% expected.
The S&P 500 is breaking down and the target is now 1250 and below that 1220.
In Europe, stocks were lower with falls of more than 0.9% in London, Madrid and Milan. The CAC fell 0.44% and the Dax dropped 0.66%.
Locally, the ASX fell another 13 points in overnight trade on the Dec SPI 200 contract to 5044 bid. The March contract was down 12 points to 5010.
We had a target of 5068 originally which was the 200 day moving average at the time and the break of that average this week and the move into the 5020′s now target 4830.
On commodity markets, Nymex crude is roughly unchanged at $97.42, Gold fell $31 to $1227.50 while Copper was unchanged at $3.33 lb. Ags were all lower with Corn off 0.7%, Wheat off 1.23% and Soybeans fell 1.51%. Bitcoin sits at $898 this morning.
On the data front, in New Zealand today we see Business PMI, while in Japan we see industrial production and capacity utilization. Tonight in Europe, we see EU employment and in the US, PPI.
Have a great day and good hunting
Greg
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NB: Please note all references to rates above are approximate
