Market Musing, Asia Pacific

The US Fed’s ‘dovish’ turn at its mid-December meeting, where it effectively called time on the rate hiking phase and opened the door to easing down the track, has reverberated across markets. Global interest rate expectations have adjusted lower and bond yields tumbled, growth linked risk assets such as equities and commodities have risen, and the USD’s downturn took another leg lower. This mix has pushed the AUD (now ~$0.67) to the top of its multi-month range, a long way (nearly 7%) from its late-October lows. While the Fed’s pivot looks to have stunned many, it wasn’t a surprise to...

We began to be more vocal about our thoughts the USD (and resultant weakness in the AUD) was looking on shaky foundations and was set to reverse course in mid-September (see Market Musings: AUD: Always darkest before the dawn). In hindsight we were a few weeks early, but nevertheless the macro landscape has evolved as we predicted causing the USD to lose ground (and the AUD to rebound) over the past month or so. As it was stressed at the start of my career, in financial markets it is better to make the right calls early, rather than hold the...