Australian Dollar's Double Jeopardy

This week it feels like the AUD was punished twice for what is essentially the same "crime". On Monday morning Asian time, the Producer Price Index (PPI) disappoints, coming out 0.6% lower than expected. The Australian dollar promptly sells off against the USD and JPY. This makes perfect sense - lower PPI generally feeds into lower inflation, thus an increased likelihood of a rate cut at the next RBA meeting. So far so good.

Overnight, SPX stabilizes and most "risk" currencies bounce a little in line with the equity market. On Tue morning Asian time, Australia's Consumer Price Index disappoints by a roughly equivalent amount. On this data release, the AUD drops again.

AUD Continues to Track Overall Risk Sentiment, Ignores Fundamentals

Over the past few days, all eyes have been on the Greek debt swap, with S&P futures quite volatile, swayed by rumours and expectations. At the same time Aud/Usd continues to trade in risk-on / risk-off mode, paying little heed to the economic reality. It underperformed slightly when GDP came out worse than expected on Wedn morning, but pretty much ignored worse employment data on Thu and an surprising trade deficit Fri morning. Overall things are not looking great at all, but the currency is