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Australian dollar smashed

au.investing.com/analysis/australian-dollar-smashed-200538556
Australian dollar smashed
By David Llewellyn-Smith   |  Dec 06, 2022 10:48
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GBP/USD
-1.39%
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USD/JPY
+1.97%
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USD/CHF
+1.45%
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AUD/USD
-2.16%
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USD/CAD
+0.63%
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NZD/USD
-2.29%
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DXY is back with a bang:

 
DXY
DXY

AUD was smashed:

AUD
AUD

Oil has a very bearish chart. If that support breaks then look out:

BRENT
BRENT

Metals rolled:

COPPER
COPPER

Miners (NYSE:RIO) too:

RIO
RIO

And EM stocks (NYSE:EEM):

EEM
EEM

Plus junk (NYSE:HYG):

HYG
HYG

As the US curve was vaporised again:

YIELDS
YIELDS

And stocks puked:

US500
US500

The proximate cause was  strong services ISM:

Economic activity in the services sector grew in November for the 30th month in a row — with the Services PMI® registering 56.5 percent — say the nation’s purchasing and supply executives in the latest Services ISM® Report On Business®.

“In November, the Services PMI® registered 56.5 percent, 2.1 percentage points higher than October’s reading of 54.4 percent. The Business Activity Index registered 64.7 percent, a substantial increase of 9 percentage points compared to the reading of 55.7 percent in October. The New Orders Index figure of 56 percent is 0.5 percentage point lower than the October reading of 56.5 percent.

Coupled with still strong Fed inflation nowcasting:

INFLATION
INFLATION

A hawkish whisper from the WSJ Fed source:

 

And massively oversold USD positions. RBC:

For the week ending November 29, USD short positioning was scaled back by 8Kto-4K. EUR longs declined by 1K to 122K. JPY shorts increased from-65K to-67K. GBP shorts increased by 1K to-37K. CHF shorts were little changed at-14K. CAD shorts increased by 4K to-16K. AUD shorts increased by 2K to-45K. NZD shorts rose from-4K to-5K.MXN longs increasedby 3K to 66K.

DXY SHORTS
DXY SHORTS

As I keep saying, it may be that the DXY has topped, but it is too early to be trading the recovery drop in it. Ahead is more Fed, likely recession, a global shock and risk-off.

Not short DXY and long AUD stuff.

Australian dollar smashed
 

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Australian dollar smashed

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