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Australian dollar catapaults as Fed mulls pause

Published 24/10/2022, 10:37 am
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DXY sagged Friday night:

AUD launched:

Gold and oil popped:

And dirt:

Big miners (NYSE:RIO) jumped:

EM stocks (NYSE:EEM) firmed:

Junk (NYSE:HYG) too:

The Treasury curve steepened markedly:

And stocks took off:

Why? This:

Some officials are more eager to calibrate their rate setting to reduce the risk of overtightening.⁰
But they won’t want to dramatically loosen financial conditions if and when they hike by 50 bps (instead of 75).⁰
This meeting could allow officials to get aligned on next steps

— Nick Timiraos (@NickTimiraos) October 21, 2022

“A half-point hike at this meeting would result in a dramatic loosening of financial conditions no matter what language they paired it with,” said @jasonfurman
“But by December, you can keep financial conditions very restrictive even with 50.”

— Nick Timiraos (@NickTimiraos) October 21, 2022

Friday night’s action gave the Fed its answer. Soft pivot and reflation will fly. AUD included.

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