Australian dollar thumped as taper surges

More taper chatter overnight, this time from noted Fed dove Dennis Lockhart. From Bloomie:

• LOCKHART SAYS TAPERING ‘COULD VERY WELL TAKE PLACE’ NEXT MONTH
• LOCKHART SAYS QE NOT MEANT TO BE ‘PERMANENT FIXTURE’ OF POLICY

I don’t think so but who cares, the threat is enough. On the data front, it was pretty weak. The Chicago Fed National Index improved marginally despite the shutdown, chart from Calculated Risk:

The index’s three-month moving average, CFNAI-MA3, increased to –0.03 in September from –0.15 in August, marking its seventh consecutive reading below zero. September’s CFNAI-MA3 suggests that growth in national economic activity was slightly below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

But the NFIB small business index went the other way. Chart again from CR:

Fall arrived literally this month, as small-business optimism dropped from 93.9 to 91.6, largely due to a precipitous decline in hiring plans and expectations for future small-business conditions. … The stalemate in early October over funding the government … left 68 percent of owners feeling that the current period is a bad time to expand; 37 percent of those owners identified the political climate in Washington as the culprit—a record high level.Job Creation. Job creation was up in October. NFIB owners increased employment by an average of 0.11 workers per firm in October after September’s decline.

And, on the housing front, huge new home builder DR Horton’s cancellation rate jumped:

The end result was stocks down a half percent and long bond yields up half a percent. Gold down the same and the US dollar up marginally.

But that was enough for the Aussie, which tanked a cent to support at $92.8 before rallying:

You wouldn’t yet call it a clear break of support but if I were the RBA I would be out there with new threats ASAP. The dollar is clearly vulnerable.