The Australian dollar has seen a decline as the stock markets continue to rise at an unprecedented rate. The global economy has been unpredictable of late, with the markets interpreting everything as bullish and stopping in all and sundry.
US jobs have been excellent, which would have terrified the market six weeks ago, however, the market remains unfazed. Total nonfarm payroll employment increased by 339,000 in May, causing the unemployment rate to rise by 0.3 percentage points to 3.7 percent, the US Bureau of Labor Statistics reported.
Meanwhile, job gains have occurred in professional and business services, government, health care, construction, transportation and warehousing, and social assistance. Wage growth is still strong at well above 4%, which is strong enough to keep inflation above 5%, but that is no problem for this bubble.
In addition to the positive US jobs report, China also made a significant contribution, even though the details of an alleged property stimulus make it look more like a pop gun than a bazooka. Unless the China stimulus turns out to be much greater than what has been leaked, the Australian dollar may continue to suffer as the AI bubble continues to grow.
This script writes itself: As the AI bubble continues to inflate, the Australian dollar is likely to melt down unless the China stimulus exceeds expectations. Once the panic selling sets in, the Australian dollar may continue to devalue.
It is a mad, mad market with a volatile economy and no clear end in sight. It’s important to keep an eye on the markets and make informed decisions accordingly.
