Intraday Market Thoughts

High Yielders Gather Pace

by Adam Button
Dec 30, 2019 23:37

AUD/USD stretches its gain above the 200-day moving average and is currently breaking 0.7000 for the first time since July. The kiwi has risen 200 pips above its 200-DMA, ignoring the pullback in indices. USDJPY dropped 80 pips 24 hrs after Ashraf wrote this about the yen. USDX posts its 3rd worst month in 2 years. Tuesday is New Year's Eve and the only US release is Dec US consumer confidence. Wednesday is off in most markets, but Jan 2nd is business as usual -- with UK and US PMI manufacturing as well as US jobless claims. This is followed by Friday's release of German CPI, US manufacturing ISM and the Fed minutes. Both GBPUSD Premium trades are in the green and 3 new charts have been added. Below, is Ashraf's latest analog chart on NZDUSD.

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High Yielders Gather Pace - Nzd D Now And 2018 (Chart 1)

If there was any lesson in 2019 it was the reminder to follow the lead of central bankers. This year's U-turn at the Fed dominated the landscape and changed everything--from the switch towards rate cuts, to the loud message of no-more rate changes. Australia's central bank had a message of its own late this year as it hit the pause button and cited a 'gentle turning point' in the economy.

With global trade and growth prospects improving, the Australian dollar remains well positioned for further gains, with a bump in the US-China trade talks considered as the only source of adversity. It's not the ideal time of the year to draw conclusions, but AUD/USD is now more than 80 pips above the 200-dma, breaking the Dec and Nov highs. The rally above the 200-dma follows 21-months where AUD/USD never climbed above it. Given the calendar, it still feels premature to chase the rally but if it's a true break, it could be a sign of good things to come.

In the bigger picture, the US dollar looks increasingly vulnerable. The dollar index itself is down 2.6% from the October high and that peak was well-short of the 2016-2017 high.

Looking ahead, the theme continues to be whether we're seeing a skid along the bottom in global growth or a rebound. The market is certainly betting on a rebound but economic data remains soft, especially in manufacturing and trade.

Act Exp Prev GMT
Chicago PMI
48.9 48.2 46.3 Dec 30 14:45
50.1 50.2 Dec 31 1:00
CB Consumer Confidence
128.0 125.5 Dec 31 15:00

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