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.