To the scoreboard:
Dow: 26,252.12 +41.31 (+0.16%)
S&P 500: 2,837.82 -1.31 (-0.05%)
AUD/USD: 0.8076 +0.0075 +(0.94%)
ASX200 SPI futures (December contracts): 5,986 (-15)
1. US dollar tanks again: The US dollar index (DXY) is down more than 1% in the wake of protectionist comments from members of the Trump administration, while Treasury Secretary Stephen Mnuchin also advocated for a weaker currency during a speech in Davos. The move means the DXY is now below 90 for the first time since late-2014.
2. All the major currency pairs rose strongly against the greenback, led by another surge in the UK pound which has now gained 5% in 2018. The AUD has gained almost 1% on the session and is pushing towards US81 cents.
3. Commodities steady the ship: The AUD also got a boost from commodity prices, as iron ore stabilised after yesterday’s sharp falls, while copper also rebounded with a 3% rally. West Texas Intermediate crude oil broke above $US65 a barrel for the first time since 2014 as inventories declined again, while the weaker USD helped pushed gold to a four-month high at $US1,358 an ounce.
4. Key data today kicks off with New Zealand Q4 inflation data later this morning. Then later tonight the European Central Bank holds its policy meeting. The focus will be on what comments are made by ECB President Mario Draghi, given the recent weakness in the US dollar and further signs of strength in the European economy.
5. The ASX looks set to open lower as US stocks took a breather from their 2018 rally overnight, while stronger currencies weighed down UK and European markets. The recent surge in US markets means the S&P500 is now nudging against a long-term trend line that it’s been unable to break above since March 2009. This chart from AxiTrader’s Greg McKenna shows the trend:
6. Bitcoin is holding steady this morning at around $US11,000, amid a week of relatively low volatiilty. Elsewhere in crypto-land, Arsenal have partnered with an online betting company looking to raise $US70 million in an Initial Coin Offering (ICO), while rapper 50 Cent claims to have made $US7-8 million by accepting payments for his 2014 album in Bitcoin. But payments company Stipe has abandoned Bitcoin, on the grounds that it’s ineffective as a means of payment.
Bonus item: This Business Insider interview with US stock investor Alex Umansky is worth a read — Umansky’s funds returned 40.6% last year and he shares his thoughts on investment rationale, diversification and volatility.
Have a great day.