Australian dollar all time short chases 40 cents

au.investing.com/analysis/australian-dollar-all-time-short-chases-40-cents-200579157

By David Llewellyn-Smith | Sep 25, 2023 09:20

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DXY is breaking out:

AUD managed to firm but it’s not going anywhere:

The CFTC AUD short is at an all-time high near -100k contracts:

One reason why is CNY is nailed to the floor:

Oil is now a massive problem for markets. Any fall in yields lifts oil and chokes everything off:

Dirt is doomed:

Miners did better:

EMs stocks are trash:

Junk firmed:

Yields eased:

But stocks know the bind they’re in with oil and the Fed now:

The extreme AUD short appears to be chasing my ruminations about further falls, perhaps as low as into a 4-handle. Of course, I cannot influence a market this liquid, but I am not the only one that identified the drivers. Ironically, this makes further falls in the AUD less likely.

Still, DXY continues to firm, and it now has a golden cross to get the technical machines’ excited:

Nor is the market long. Nothing like it:

Yet the outlook for DXY remains very bullish:

Europe is still in recession with worse ahead.
China is struggling manfully, but the property tide is still going out.
Rising oil is DXY bullish.
Resilient US growth has the Fed set to hike again as other major central banks stop.

Note that my original forecast for AUD with 4-handle was five years away. It was based on the notion that Chinese growth is turning Japanese while the US economy is about to launch into an AI supercycle.

I firmly believe China is stuffed, but it may take that long for it to be fully reflected in waning growth.

JPM research indicates a similar timetable for US artificial intelligence profits Nirvana:

The extreme AUD short will prevent it from going much lower today.

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Australian dollar all time short chases 40 cents

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