Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Australian Dollar Short Squeezes Higher

By David Llewellyn-SmithForexSep 06, 2021 09:58
Australian Dollar Short Squeezes Higher
By David Llewellyn-Smith   |  Sep 06, 2021 09:58
Saved. See Saved Items.
This article has already been saved in your Saved Items

Forex markets sustained their counter-trend actions Friday night, and how. DXY fell like a stone while EUR and AUD are roaring:


It’s a pretty wild rally suggesting a short squeeze yet CFTC data got even longer:

Commodities all rose:

Miners less:

EMs stocks too:

EM junk was soft:

The US curve steepened:

And Growth led stocks again:

So, how far is this rally going to get? The drivers are threefold:

  • The rally kicked off when RBA research suggested that wage inflation would accelerate below 4.6%.
  • It was then fed by the dithering Fed.
  • It’s probably also been given a lift by the shift away from lockdowns in some Australian states.

Of these three I expect:

  • The RBA to delay taper though I am not convinced. They have a bad habit of reverting to glass-half-full form.
  • The Fed to not get to taper this year at all because the China hard landing – such as it is and even if confined to property – will derail it in a global growth scare and correcting markets.
  • Australia to be in recession in Q4 as well, as the rebound is muted by Morrison’s electoral strategy of fear and death freedom.

In terms of forex then:

  • The first should be bearish but might be bullish.
  • The second is a battle between the Fed and financial flows versus a Chinese growth hock for commodities which the later should win before the former can.
  • The third is bearish.

It’s not exactly roses for the AUD so I’d still be looking to use any strength to shift assets offshore, especially so given the longer-term outlook remains DXY outperformance on fiscal, growth and yield leadership.

The major upside risks is a policy error from the RBA and earlier stimulus from China. Of those, the first is more worrying right now.

Australian Dollar Short Squeezes Higher

Related Articles

Kathy Lien
AUD Bounces Off 0.70; Euro Underperforms By Kathy Lien - Dec 07, 2021

The US dollar rallied on Monday against some but not all of the major currencies.  Our readers should not find the rally in USD/JPY or decline in EUR/USD surprising because we...

Australian Dollar Short Squeezes Higher

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email