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EUR

Calm returns, dollar resumes its slide

Good morning. Foreign exchange markets are trading on a more stable footing as tumult in the precious metals complex eases and the White House leaves its social media accounts in a state of benign neglect. Gold and silver prices are up five and ten percent respectively from their lows, North American equity markets appear set for an advance at the open after yesterday’s higher close, Treasury yields are little changed, and commodity-linked currencies are reversing some of their weekend losses. The euro, pound, and yen are all trading sideways as investors await Thursday’s central bank meetings and brace for the...

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RBA in focus

• Metal vol. Large swings in gold & silver prices. Positive US data supported the USD index. AUD held up thanks to some relative outperformance.• RBA today. On net, a RBA rate hike looks more likely than not. But there is the chance of a surprise. What the RBA says about the future also matters. Global Trends Various financial markets continue to whip around with volatility continuing at the start of the new week. During yesterday’s Asian session gold and silver prices tumbled further, US equity futures opened lower, and the USD recouped a little more lost ground as markets...

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Precious metals plunge triggers global selloff

A slow-motion flight to safety is underway across the currency markets this morning, as a bloodbath in the precious metals complex extends into a second week. Equity futures are pointing to further losses at the North American open, the US dollar is climbing against all of its major rivals as traders exit risky positions across a range of asset classes, and commodity-sensitive currencies like the Australian dollar, Canadian dollar, and Swiss franc are coming under selling pressure. Gold and silver prices suffered their biggest selloff in years on Friday, prompting many observers to suggest that the “debasement trade” was in...

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USD turnaround

• Reversal. Positive data & Trump’s Fed Chair announcement boosted the USD. Commodities fell. AUD also lost ground (now ~2% below Thursday’s peak).• Macro risks. RBA expected to hike rates (Tues). But yield spreads & AUD already moved. US jobs data might rebound. This could be USD supportive. Global Trends There was a bit of a “reversal of fortune” across markets at the end of last week with US equities falling slightly (S&P500 -0.4%), short-end bond yields rising (US 2yr +4bps), commodities such as copper (-5.2%) and gold (-9.6%) tumbling, and the USD recouping lost ground. In FX, EUR declined...

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Warsh nomination lifts dollar

The dollar is edging higher after US president Donald Trump said he will nominate Kevin Warsh to lead the Federal Reserve, a move that would place a long-time critic of expansive monetary intervention at the helm of the world’s most powerful central bank. Short-term Treasury yields are declining while long-term rates climb, equity futures are moving lower, and most major currencies are retreating against a resurgent greenback. Warsh served as a Fed governor from 2006 to 2011 and has deep ties to Wall Street, including a stint working with Stanley Druckenmiller. He is also married to the daughter of Ron...

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