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USD

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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RBA U-turn

• Holding on. No change in rates by US Fed. US equities & bond yields consolidate. USD index ticks up, but AUD outperformance continues.• RBA hikes. Stronger CPI boosted RBA rate rise bets. Hike next week ~70% priced, 2 moves baked in by year-end. AUD up at Feb ’23 levels. Global Trends Markets were calmer overnight compared to the bursts of volatility that have washed through recently. US equities consolidated with the S&P500 up near record highs while US bond yields were range bound with the 10yr rate close to its 1-year average (now ~4.24%). In FX, the USD index...

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Fed holds rates in broadly-supported decision, shifts statement language into neutral

The Federal Reserve left rates unchanged this afternoon, and subtly upgraded its assessment of labour markets and growth, disappointing those expecting a more dovish bias and lending the dollar some much-needed support. In the widely-expected decision, the Federal Open Market Committee voted by a consensus-driven 10-to-2 margin to maintain the target range for the federal funds rate between 3.50 and 3.75 percent. Trump appointee Stephen Miran again dissented from the majority in favour of a bigger move, joined by Christopher Waller, who is seen as a potential candidate for Chair when Jerome Powell’s term ends. In a tweak to the...

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