Markets Overview

  • ASX SPI 200 futures up 0.3% to 7,459.00
  • Dow Average up 0.6% to 36,327.95
  • Aussie down 0.1% to 0.7392 per US$
  • U.S. 10-year yield fell 7.5bps to 1.4513%
  • Australia 3-year bond yield fell 4bps to 0.93%
  • Australia 10-year bond yield fell 2bps to 1.81%
  • Gold spot up 1.5% to $1,818.36
  • Brent futures up 2.7% to $82.74/bbl

Economic Events

The Australian dollar appears shaky after outperforming all of its Group of 10 peers last month.
It slumped by almost a full U.S. cent on Nov. 2 when the Reserve Bank of Australia pushed back against rate-hike bets, then extended its slide into the end of the week. There is more danger ahead if jobs and wages data prove softer than expected.
Investors counting on weakness in the currency have piled up record short positions this year, with only a little paring recently to encourage the bulls, Commodity Futures Trading Commission data show. The tumble in the price of iron ore, the nation’s biggest export earner, adds to the fragility of the gains posted by the Aussie since recovering from its 2021 low in August.
“We expect the Australian dollar will remain heavy while there is a risk interest-rate markets unwind further expectations for RBA rate hikes,” said Kim Mundy, a currency strategist at Commonwealth Bank of Australia. Still, the changes in rates markets since last week’s policy meeting likely mean that any falls are more moderate this time, she added.

Westpac Banking Corp. sees the pair trading below 74 cents as commodity price support wanes, senior currency strategist Sean Callow said in the wake of the policy meetings from the RBA and the Federal Reserve.
The median of fourth-quarter estimates compiled by Bloomberg have the currency slipping to 73 cents, compared a median of 74 cents a month ago.
Underscoring how much repricing has gone on in rates, Australia’s benchmark three-year bond yield tumbled almost 30 basis points last week, the biggest move since 2012.
Swaps traders have priced a 15 basis point hike in interest rates by mid-year, with two more increases by the end of next year. That’s well ahead of what Governor Philip Lowe sees, setting the scene for another re-think by traders if the jobs and wages data supports his sanguine view.
Still, the lifting of pandemic lockdowns in Australia’s two biggest cities, and strong terms of trade, provide hope for investors betting that currency can resume its rally.

Other News

A giant 7.9kg potato found in a New Zealand couple’s overgrown garden may set a new world record for the largest of its kind ever to be discovered.
Colin and Donna Craig-Brown were doing a spot of weeding in their Hamilton back yard, when Colin’s hoe hit something below the ground.
“So I said to Donna this must be one of those white kūmara (sweet potato) that we grew,” he told Stuff, “because some of them just grew massive here.”
He tasted it, discovered it was potato and set about excavating it from the soil.
The bulbous tuber weighs the same as an extra-large turkey and would exceed the allowance for check-in luggage. The couple named their new discovery Doug, and have grown pretty fond of him.
“We put a hat on him. We put him on Facebook, taking him for a walk, giving him some sunshine,” Colin told the NZ Herald. “It’s all a bit of fun. It’s amazing what entertains people.”
The current Guinness world records entry for the heaviest potato is a 2011 specimen found in Britain, that weighed in at just under 5kg. The couple say they’ve applied to Guinness to have Doug recognised and are waiting to hear back. The couple could not recall when they last planted potatoes in their garden, but guessed it must have been about two or three years ago. Colin thinks perhaps Doug self-seeded.
“It’s a mystery to me,” Colin said. “It’s one of nature’s little pleasant surprises.”
“It’s fair to say our veggie garden can sometimes get a bit feral. There are some parts of the garden you need to pack a lunch and advise your next of kin before heading in to,” he told Stuff.
The couple have wrapped Doug in plastic bags to keep him from drying out, and Colin, an amateur brewer, says he is now keen to turn the oversized tuber into vodka.