An important outcome of the weekend was Iran’s recognition that the Ukrainian Boeing was hit by their missile. This is absolutely the right decision to reduce tensions in the region as much as possible. However, the U.S. has already imposed new sanctions against Iran, destroying its already weak economy.
Chart of the day AUD/USD
Against this background, all risky assets grew. And the main beneficiary of the growth was the Australian dollar, which everyone had long forgotten about.
Why is he forgotten? There are several reasons for that. It’s the drop in prices for the main export commodity – iron ore. And the U.S. trade war with China (and China is the largest exporter of that iron ore). And the most difficult situation with fires, which caused Australia’s GDP to lose up to 0.5% per annum.
As a result, the Aussie is on a multi-year low. And not only against the American dollar (which is so clear), but also against other commodity currencies: Canadian and New Zealand dollars.
We know very well when a certain asset becomes completely uninteresting to everyone, that’s when a new bull market starts. Fundamentally and technically, the whole negative is already included in the price. The trade war with China will somehow be closed by the USA in the coming months. And then there is a new positive, in the form of an increase in gold prices, which is also one of the main export commodities. Therefore, it is worth watching the Australian dollar closely all the current year, finding the entry points when reaching new highs.
Oil prices continued to fall. After the exclusion of the geopolitical factor, the opposition of OPEC states and Russia against oil shale producers in North America begins again. Immediately after the holidays, data on a sharp increase in the number of new drilling rigs in Canada came out. And this is an objective process, given the recent price spike. It can be assumed that in the coming weeks a large number of wells will be reactivated, the owners of which have sold futures for future oil supplies.
What’s waiting for us today?
10.30 UK industrial production data for November
10.30 UK GDP data for November
16.30 Economic situation overview from the Bank of Canada
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